The recurring buzzword this year has to be inflation but possibly in second place you’ll find the combination of supply and chain.
Many industries have been affected by supply chain bottlenecks, not least the auto industry with chip shortages coming to the fore. For the EV segment there’s another ongoing concern; that of the possibility of a lack of batteries/battery materials.
That said, Canaccord analyst George Gianarikas thinks Tesla (TSLA) has been making sure it is well-equipped to deal with any supply chain issues.
“Over the last several years, Tesla has worked on securing battery materials supply through direct partnerships with the producers of lithium, cobalt, and nickel,” the analyst said. “As a result, Tesla has been able to navigate the global, rolling supply-chain crisis better than its competitors.”
Tesla, therefore, sits in an “enviable position” and is able to look on as others in the auto industry rush to get hold of enough supply of materials essential to EV production (such as lithium and rare earths).
The EV materials issue appears to be front and center for industry giants such as Volkswagen, Ford, and GM who have “accelerated procurement efforts” although Gianarikas notes that others “appear to be less enthusiastic.”
As supply-chain issues regarding materials thwart OEM electrification targets, Gianarikas thinks there will be an uptick in mining acquisitions by auto OEMs.
Tesla has another plan in mind. A recent proposal filed with the Texas Comptroller’s Office shows that it intends to develop a lithium hydroxide refining facility in the Lone Star State with “access to the Gulf Coast shipping channel.” Naturally, Gianarikas likes this idea, noting that as the company “deepens” relationships with lithium miners, the pivot toward a NA lithium refining facility makes sense. “We see this strategic step by Tesla as a testament to its vertical integration, which we view as key to long-term success in future mobility,” the analyst summed up.
All told, Gianarikas rates TSLA a Buy, although his $304 price target suggests shares will remain range bound for the foreseeable future. (To watch Gianarikas’s track record, click here)
So, that’s Canaccord’s view, let’s turn our attention now to rest of the Street: TSLA’s 19 Buys, 6 Holds and 5 Sells coalesce into a Moderate Buy rating. The average target is only a touch higher than Gianarikas’s objective; at $309.38, there’s room for just 1% upside from current levels. (See Tesla stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
