Posted on February 05, 2015 by Matt Pressman
Full Disclosure: yes, we're both proud owners of the Tesla Model S vehicle and long-term, bullish investors of Tesla Motors stock (TSLA). So, we're always keen to read what Wall Street analysts might have to say about our favorite company. Is this an act of reading fairytale "tea leaves" or a real indication of what's coming? We'll let you decide. To help, we thought we'd provide you an analyst "round-up" to distill their insights on Tesla Motors' outlook in 2015.
To be fair, very often, the future is far better predicted by following "word of mouth" that we (personally) get first-hand directly from Tesla owners and sifting through Tesla-specific forums, blogs, and news outlets. And often a dinky little tweet from Elon Musk can predict public sentiment (and stock price) better than any long-winded analyst rhetoric. That said, TSLA stock is news-sensitive and quite volatile. Yes, it's been a roller coaster ride hanging onto these shares. But, make no mistake, we're not selling our shares anytime soon. And, this week it seems some analysts definitely felt the same. So hold on tight... TSLA stock price rocketed upwards* following a handful of analyst reports. So, what did they have to say?
First, on Monday, Trip Chowdhry, co-founder of Global Equities Research, commented that Tesla Motors is a net beneficiary in a strong dollar environment. Chowdhry notes that 70% of Tesla's component suppliers are International and these components are used in 100% of Tesla's cars. Thus, a strong dollar reduces the costs of 70% of its components, resulting in a net benefit for the company. Chowdhry adds that 50% of Tesla sales are domestic while 50% is international. And, the international customer's sensitivity towards performance-related issues like acceleration and instant torque allows the negative pass through of the foreign exchange to be "easier.” "The net impact of Stronger Dollar on Tesla's business probably makes TSLA one of the best Technology stocks to own in the Strong Dollar environment," Chowdhry concludes. Shares at Global Equities Research are Overweight rated with a $385 price target.
Then, on Tuesday, Dougherty & Co.’s Andrea James reiterated her bullish stance and $325 price target on the stock: “Tesla has assembled the world’s top vehicle engineering talent and top electric vehicle power train expertise. To buy the stock is to buy this talent and Tesla’s ability to source the world’s best engineers. Tesla’s phenomenal development to date gives us confidence that Tesla will consolidate its 11-year head start on vehicle electrification in 2015.” This reconfirms her outlook earlier this year, when James named Tesla Motors (TSLA) her top pick for 2015, the third year in a row it’s gotten the honor.
Also on Tuesday, Morgan Stanley analyst Adam Jonas published his report: "We expect a pivot in news flow and outlook for Tesla on several fundamental fronts, triggering a recovery in the share price,” and Jonas told investors that the price should “reclaim $250 by spring.” Referring to the recent share price decline, Jonas says one can take advantage of a “classic opportunity to increase exposure to what we see as the world’s most important auto company.” Referring to the "D" (dual motor Model S), he explains that the car's enhanced performance will “help both volume and transaction price,” Jonas said. “The cars are getting better... and more fun.” In addition, Jonas predicts that the forthcoming Model X "will represent a significant shift in the perception of the addressable market for Tesla products -- not unlike what Porsche experienced when it brought the Cayenne to market.” Jonas said he believes Tesla shares will climb back to $280.
*TSLA closed today at 220.99 (at the time of this writing, 2/5/15).