With shares up 600% last year, another Wall Street bear threw in the towel Tesla Inc (NASDAQ: TSLA) on Friday.
Tesla Analysts: Bank of America analyst John Murphy upgraded Tesla from Underperform to Neutral and raised its price target from $ 800 to $ 1,750.
Tesla Thesis: Murphy said he is still skeptical about Tesla’s long-term fundamentals, but the history of stock growth has taken a huge toll due to its access to low-cost capital. Murphy said Tesla is experiencing a self-fulfilling capital spiral in which the momentum in Tesla stock price creates an opportunity to raise cheaper capital which pushes Tesla stock price higher.
“While we remain skeptical that TSLA will be the leading EV maker in the long run, if a large global footprint can be built with cost-free capital, the ̵6;growth’ history would hold the day for stocks,” Murphy said. in the note.
See also: Morgan Stanley Goes All In on Tesla Battery Day, Stock Updates
Murphy said Tesla’s unrestricted access to capital should pave the way for Tesla to accelerate its revenue growth rate to 50% per year over the next five years. However, he said Tesla’s record of growth and profitability up to this point is “volatile” provided the company has not reached 500,000 units of sales per year after 17 years in operation.
Murphy is projecting $ 11 in EPS for Tesla in 2020, and $ 13.50 in EPS in 2021.
He said that given the current interest rate climate and Tesla’s tight share price, the company should have no problem further capital execution to fund its growth investments in the coming years.
Benzinga’s Take: With funding concerns seemingly eliminated, Tesla has no excuse to lose its growth targets. Tesla hopes to produce 500,000 vehicles by 2020, two years after its original target.
Tesla shares traded around $ 1,650 at the time of publication.
Latest ratings for TSLA
|August 2020||B of securities||improvements||underperform||neutral|
|August 2020||Morgan Stanley||improvements||underweight||Equal-Weight|
|August 2020||Citigroup||hold||for sale|
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