Tesla (TSLA) has a new Street high price target. Oppenheimer analyst Colin Rusch more than doubled his price target on the stock to $1,036 from $486.
“We believe TSLA has the potential to be a transformational technology company and deliver outsized returns,” wrote Rusch in a note to investors.
Rusch reiterated his Outperform rating on the electric vehicle maker.
“We believe the company's execution on Model 3 and Y volumes in the medium-term and cost reduction, largely from a battery perspective, are critical to realizing positive incremental operating margin and cash flow necessary to support sustainable profitability,” he wrote.
Earlier this week Tesla began deliveries of its Model Y in China, believed to be one of the several linchpins of the company’s expected growth.
Rusch noted the stock has doubled since November, and bulls are betting on Tesla’s commercialization of autonomous vehicles technology.
“While we continue to have misgivings about risks related to TSLA not incorporating LiDAR into its vehicles yet, we believe the learning cycles enabled by having over 1M vehicles on the road is an extraordinary advantage,” he continued.
“Assuming 12K miles driven/year per car, TSLA’s shadow mode data collection can reach that threshold in ~six months, years faster than competitors. This dynamic plus equity market multiple appreciation drive our PT increase to $1,036,” he wrote.
Tesla’s average Street price target is $511 with 13 buys, 15 holds and 13 sells.
Analyst Dan Ives of Wedbush recently increased his price target on the stock to $950, which is now the second highest on the Street. Ives forecasts a bull case scenario of $1250 while maintaining a Neutral rating on the stock.
Earlier this week, Rob Arnott, founder and CEO of giant investment advisor Research Affiliates, told Yahoo Finance Tesla may be a bubble.
“When you have Tesla trading for more than the entire rest of the auto industry, excluding companies that deal exclusively in electric vehicles ... what you’re looking at is an extraordinary spread in valuations,” said Arnott.
Tesla shares opened higher on Wednesday and were trading fractionally higher during the early morning session.
Ines covers the U.S. stock market. Follow her on Twitter at @ines_ferre
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