Tesla Inc. (NASDAQ: TSLA) is frequently referred to as an overvalued car-maker. After all, its $60 billion market value is 15% more than GM and one-third larger than Ford. The big problem in valuing Tesla is that it is just not judged by the investing community as a car company.
On Tuesday, June 13, 2017 an upgrade from Berenberg took Tesla’s rating to Buy from Hold. The firm’s Alexander Haissl went from a bearish price target to a rather bullish one, raising the target to $464 from $193. This is now officially the highest analyst price target in the Thomson Reuters universe.
According to Tuesday’s analyst report, the perceived threat to Tesla from traditional original equipment manufacturers (OEMs) has been overestimated. Haissl’s view is that the OEM complacency over electric vehicle technology is worse than perceived. The report also noted that traditional OEMs may need to consider more drastic measures to compete, and that would first require a transition to dedicated production lines versus integrated production.
Haissl’s report said:
With no clear pathway to high-volume electric vehicle production for these OEMs before the mid-2020s, Tesla will be given a near-monopolistic opportunity to gain market share and outcompete the incumbent automotive industry.
Tesla shares hit a 52-week high of $376.87 last week, but the sell-off in key technology names took shares lower. The stock was last seen trading up 3.3% at $370.90 on Tuesday.
Tesla’s current consensus analyst target price is $269.56, down from $275.50 a month ago. The highest analyst target price in the Thomson Reuters sell-side universe was $380.
Thomson Reuters has the following consensus earnings per share estimates: −$5.80 for 2017, −$0.91 for 2018, $5.66 for 2019 and $11.42 for 2020. That values Tesla at 65 times adjusted 2019 earnings and 32 times expected 2020 earnings.
If these targets sound high, a fund manager named Ron Baron appeared on CNBC on the same morning. His take is that Tesla shares could reach $500 to $600 in 2018. He even threw out a $1,000 price potential in 2020. At that point, he thinks Tesla could be generating $70 billion in annual sales and $10 billion in operating profits.
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