Lifted in toto from MoneyBeat:
Nothing like a 280% rally in day-trader darling Tesla Motors Inc. TSLA +4.29% to finally get an analyst’s attention.
Deutsche Bank upped its view on of the electric-car maker to buy from hold, slapped a $160 price target on the company and said the stock price could still more than double within the next three-to-four years.
“We have been late in recognizing that the Street would value Tesla on out-year potential and have been overly focused on the risks,” analyst Dan Galves wrote to clients, offering a mea culpa of sorts.
Galves offered five reasons for what’s changed his thinking over the past few months:
1) The stellar Consumer Reports review lessened our concern on quality issues that were experienced by early customers; 2) U.S. orders have risen to 20k annualized (vs 12k-13k in Q1), reducing concerns on sustainability of demand; 3) Supercharger network build-out has potential to extend and sustain TSLA’s competitive advantage; 4) We’ve become more comfortable with the walk to 25% gross margins in Q4 (in fact, we expect an upside surprise in Q2). And now see potential for 35%+ on vol’s >50k; and, 5) Based on proprietary work, we now expect the Gen3 veh to fully close the cost gap to non-EV competition with margins in the 25% range.Shares recently rose 4% to $129. The stock, which traded in the low $30s earlier this year, has been on a tear since May. It’s up 280% this year.
The company is scheduled to report earnings results on Aug. 7 after the closing bell.