Posted on December 17, 2018 by Matt Pressman
Tesla is a polarizing stock on Wall Street. There are plenty of bulls and bears that work hard to make their case. However, there's a new Wall Street analyst covering Tesla [NASDAQ: TSLA] who's enthusiastic about the company's potential but warns of great volatility ahead. According to CNBC, "Wedbush Securities began coverage of Tesla shares on Friday with an outperform rating."
Above: The road ahead for Tesla will have twists and turns (Instagram: garyqian)
“Tesla has evolved into one of the most dynamic technology innovators over the last 30 years and, in our opinion, has put itself into an esteemed category of companies such as Apple and Amazon that have revolutionized consumer buying habits and behaviors over the last decade,” Wedbush analyst Daniel Ives said in a note to investors.
According to Ives, "a technology titan over the coming years despite the near-term turbulence... Seeing the forest through the trees we believe Tesla has the most innovative product roadmap in the technology space over the next 5 to 10 years."
Above: Wedbush Securities Analyst, Daniel Ives, sees this as a 'pivotal inflection point' for Tesla (Youtube: CNBC Television)
As reported in Business Insider, Ives notes, "While there will be speed bumps along the way, we believe getting worldwide production annually to between 750k and 1 mm units by 2020 is an achievable target that will further bolster the Tesla growth thesis for the coming years." He adds, "Over the next 5 to 10 years, a more efficient production ramp and process will enable Tesla to see a discernible jump in profitability and margins."
Ives emphasizes that, "this will be a bumpy road... [but] we believe Tesla has a golden opportunity to ramp Model 3 unit sales in 2019 and beyond and thus translate into massive FCF and profitability as we look out into 2022-2030 based on [Wedbush Securities] detailed auto unit analysis."
Above: Tesla's Model 3 (Instagram: voyagewithoutcarbon)
Smarter Analyst reports on the analysis specifics provided by Wedbush Securities. And it turns out, Ives views "Tesla as a disruptive technology vendor along the likes of Apple, Google, and Amazon and believe[s] a triangulated, longer term valuation approach for Tesla is more accurate to capture the intrinsic value in this innovative technology roadmap. To this point, looking out a more normalized model with $22 of earnings power by 2025 and our FCF projections of $5 billion by 2025 we believe a valuation of $440 per share is fair for Tesla."