With the stock up 600% in the past year, another one Wall Street bear surrendered on Tesla Inc (NASDAQ: TSLA) on Friday.
The Tesla Analyst: Bank of America analyst John Murphy updated Tesla from Underperform to Neutral and raised his cost target from $800 to $1,750.
The Tesla Thesis: Murphy said he is still doubtful of Teslas long-term basics, but the stocks growth story has actually gotten a big increase due to its access to inexpensive capital. Murphy stated Tesla is experiencing a self-fulfilling capital spiral in which momentum in Teslas share price develops an opportunity to raise more affordable capital which drives Teslas share rate higher.
” While we remain hesitant that TSLA will be the dominant EV car manufacturer in the long-run, if a big global footprint can be developed with no-cost capital, the development story would carry the day for the stock,” Murphy stated in the note.
See Also: Morgan Stanley Goes All-In On Tesla Battery Day, Upgrades Stock
Murphy said Teslas unrestricted access to capital must clear the course for Tesla to accelerate its earnings growth rate to 50% each year over the next five years. He stated Teslas track record of growth and profitability up to this point is “uninspiring” provided the company hasnt reached 500,000 unit sales per year after 17 years in operation.
Murphy is predicting $11 in EPS for Tesla in 2020, and $13.50 in EPS in 2021.
He stated provided the present interest rate climate and Teslas skyrocketing share cost, the company must have no issue executing additional equity raises to fund its growth investments in the coming years.
Benzingas Take: With funding concerns relatively eliminated, Tesla has no reason for missing its development targets. Tesla is hoping to produce 500,000 lorries in 2020, 2 years behind its initial target.
Teslas stock traded around $1,650 at the time of publication.
© 2020 Benzinga.com. Benzinga does not supply investment recommendations. All rights reserved.
© 2020 Benzinga.com. Benzinga does not supply financial investment guidance. All rights booked.
Most Current Ratings for TSLA
DateFirmActionFromTo Aug 2020B of A SecuritiesUpgradesUnderperformNeutral Aug 2020Morgan StanleyUpgradesUnderweightEqual-Weight Aug 2020CitigroupMaintainsSell
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