Tesla Inc (NASDAQ: TSLA) shares are up again on Monday after one analyst gave Tesla its highest Wall Street price target yet.
The Tesla Analyst
Argus analyst Bill Selesky reiterated his Buy rating for Tesla and raised his price target from $556 to $808.
The Tesla Thesis
Selesky is forecasting sustainable revenue growth from Tesla’s legacy vehicles, including Model S Model X and Model 3.
“Despite past production delays, parts shortages, labor cost overruns, and other difficulties, we expect Tesla to benefit from its dominant position in the electric vehicle industry and to improve performance in 2020 and beyond,” Selesky wrote in a note.
In its earnings call, Tesla said it expects to produce more than 500,000 vehicles in 2020, with one of the major growth drivers being Model 3 production at its new Shanghai plant. Tesla also plans to demonstrate the company can be self-funding this year. Tesla has reported back-to-back profitable quarters for the first time in a year.
Argus raised its 2020 EPS estimate from $5.96 to $8.01, slightly above consensus estimates of $7.96. Argus also set its 2021 EPS estimate at $15.68. Even after raising his earnings estimates, Selesky said Tesla is trading at more than 80 times his 2021 forward earnings projections.
The Argus price target is now the highest among all Wall Street analysts and comes just weeks after New Street raised its price target to $800. Other Tesla bulls are even more optimistic about the long-term outlook for the company. ARK Investment Management, a thematic investment fund, recently raised its 2024 price target for Tesla to $7,000.
Tesla has exceeded earnings expectations in the past two quarters, but its huge rally and potential short squeeze makes it difficult to buy the stock at current levels. Tesla is trading at 80 times 2020 EPS and 43 times projected 2021 EPS even though revenue was up just 1% in the fourth quarter and down 7.6% in the third quarter.
Tesla's stock traded higher by 8.8% to $707.91 per share at time of publication.
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