After delivering the goods in last week’s outstanding 2Q earnings report, Tesla (TSLA) shares paused for a breather. Toward the end of the week, a sell-off ensued. A classic case of “buy the rumor, sell the news,” the euphoric surge, nevertheless, had to grind to a halt at some point. The gains are mind boggling when broken down; over the last 12 months, Tesla shares have appreciated by 565%, 263% of which has occurred year-to-date, and 50% in the last month alone.
However, Deutsche Bank analyst Emmanuel Rosner expects the momentum to continue, as there are simply too many tailwinds pushing Tesla forward.
“Tesla stock has seemingly been making new all-time highs every week, supported by leaks of the strong 2Q performance and expected inclusion into the S&P 500. We believe the upcoming positive potential catalysts for Tesla, combined with the scarcity of investment opportunities in the vehicle electrification space, could keep momentum strong in the near-term,” Rosner said.
The analyst maintains a Hold rating on Tesla shares while giving the price target a serious makeover – boosting it from $1,000 to $1,500. Expect downside of 1%, should the figure be met over the next 12 months. (To watch Rosner’s track record, click here)
After reporting a profit for the fourth consecutive quarter, Tesla finally became eligible for inclusion in the S&P 500, and as part of the index, it is likely more institutional money will be heading the stock’s way. The September 22 Battery Day, when Tesla is expected to reveal new battery technology, could represent another potential catalyst.
Rosner, though, is looking further ahead. With Tesla on track to meet its goal of delivering 500,000 vehicles in 2020, and the official confirmation that Texas is the location for its new US plant, the analyst believes Tesla is “positioning itself for much higher volumes.”
“Ultimately,” Rosner concluded, “We could envision Tesla producing over 2 million vehicles by the middle of the decade.”
So, that’s Deutsche Bank’s view, how does Tesla fare with the rest of the Street? Based on 4 Buys, 13 Holds and 12 Sells, the EV pioneer currently has a Moderate Sell consensus rating. At $1,257.04, the average price target implies shares could decline by 18% over the next year. (See Tesla stock analysis on TipRanks)
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