Thursday, October 17, 2013

Tesla Upgraded: Analyst Sees Another 33% Upside

Tesla shares are already up more than 400% this year. One analyst still sees significant upside ahead.

Tesla earlier this month defended the car’s safety, noting the fire was contained to the front of the vehicle thanks to the design and construction of the battery pack.
Last week, Jefferies analyst Elaine Kwei boosted her price target to $210 from $160. She said her research has led her to believe the Model S is still considered safer than conventional vehicles.
And now comes the latest analyst upgrade from Mr. Irwin at Wedbush. He offered more details on his firm’s survey, which prompted the upgrade:
“Survey data was supportive for significant Gen III mass market potential in the $35k-$45k price range. In a survey of 892 respondents, we were pleasantly surprised that over 20% of respondents indicated they would “absolutely consider” driving an electric vehicle (vs. 65% “maybes”), and 19% were willing to pay a $5,000 or greater premium for a 90% improvement in fuel economy. This indicates a healthy number of mainstream car buyers are likely willing and able to pay the initial premium to buy an electric vehicle, where they would expect a payback based on improved fuel economy. We see these buyers as credible since 72% of the two groups overlapped and 64% scored in the top two tiers of our technology adopter quotient. We screened survey respondents to include only those that indicated they own or lease either a car, truck, or van and are likely to purchase or lease a new vehicle in the next year.”
Mr. Irwin also boosted his 2017 sales estimates for a third-generation Tesla model (yes, 2017). He forecasts that model selling in the range of 300,000 to 500,000 units, up from his prior forecast of 150,000 sales.
“We see strong positives in Tesla’s credible path to longer-term battery cost reduction and the Gen-III
vehicle target costs,” he says, “and what we now believe will be a receptive buying public willing to purchase EVs while retaining reasonable expectations for these vehicles.”