Proudly sponsored by

Tesla shares may reach $960 in early 2021, biggest bull says

Will the rally continue?
A man walks past a Tesla Motors Model S electric automobile at one of the company's electric charging station near a shopping mall in Beijing, China. Image: Qilai Shen/Bloomberg

Tesla’s most bullish Wall Street analyst predicts the electric-car maker’s dizzying rally will accelerate this year and that the stock will trade in the $640-to-$960 range in early 2021.

New Street Research analyst Pierre Ferragu anticipates the company will sell 2 million to 3 million cars per year after 2025 at industry-leading margins, justifying a market capitalisation of $230 billion to $350 billion, or about $1 100 to $1 700 per share.

“The stock will remain volatile, as the spread between bull and bear cases remains wide,” said Ferragu, who boosted his price target to a Street high. “And God only knows what the next controversy will be.”

Tesla is set to report quarterly earnings next week. Shares of the company rose as much as 6.9% to touch $545.90 in New York on Tuesday, and have increased more than 100% over the past three months. A surprise third-quarter profit and strong deliveries for the fourth quarter helped fuel the rally, along with the opening of its China plant.

Ferragu, who raised his price target to a $800 from previous $530, expects the company to beat estimates for free cash flow when it releases fourth-quarter earnings on January 29.

He also predicts 2020 delivery guidance will exceed projections, and sees a potential drop in gross margins in the first half of the year as Shanghai-assembled Model 3s — which have higher fixed costs per car — increase in the overall mix.

Earlier on Tuesday, Bernstein analyst Toni Sacconaghi struck a cautious note, saying the Shanghai Gigafactory production could pressure margins in fourth and first quarter.

© 2020 Bloomberg L.P.

COMMENTS   0

You must be signed in to comment.

SIGN IN SIGN UP

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

NEWSLETTERS WEB APP SHOP PORTFOLIO TOOL TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: