Bullish Consensus Building for TESLA (TSLA)

Tesla Motors, founded and run by genius billionaire-workaholic Elon Musk, reports its quarterly earnings after the bell on Wednesday this week.  In prep for the big event, analysts are coming out of the woodwork to give their opinions on the earnings prospects of the electric car making company.  While the overall consensus the past year has been mixed, more recent opinion -- especially in the wake of Tesla's announcement of a new home battery -- has been quite positive.  Here is a compendium of opinon, all out within the past 48 hours:

PACIFIC CREST SECURITIES 

In a report published Tuesday, analysts at Pacific Crest Securities reiterated their Overweight rating on Tesla Motors Inc and set a price target of $293. The analysts believe that concerns regarding waning demand are misplaced.

"We believe misperceptions of both falling lead times on Tesla's website and bigger discounts for show-room models are driving some to believe that Model S demand is waning. We'd disagree based on feedback from Tesla sales centers," the analysts said.

JEFFRIES 

Jefferies Group assumed coverage on Tesla in a note issued this morning.. The firm set a “buy” rating and a $350.00 price target on the stock. Jefferies Group’s price objective would indicate a potential upside of 52% from the stock’s close.

Jefferies analyst Dan Dolev says worries about Chinese sales are overblown.  He also cites a consumer survey that reveals Tesla could sell at least 500,000 cars by 2020 in North America/Western Europe alone. That same survey shows little consumer enthusiasm for Apple/Google cars.

Stacking Tesla models up against its peers, the seeds are sown for the company to deliver a 60% adjusted-earnings compound annual-growth rate through 2020. 

MORGAN STANLEY

In a report published Tuesday, analysts at Morgan Stanley maintained their Overweight rating on Tesla Motors and their price target of $280.

According to the analysts, "Following Tesla's launch of residential and commercial energy storage products, investors appear more willing to include the electric utility TAM in the Tesla valuation discussion."

Morgan Stanley believes that Tesla's energy storage solution could completely overturn the multi-trillion-dollar worldwide motor vehicle sector, as well as the trillion-dollar electric utility sector. Following full deployment and consumer adoption, which the analysts believe could take 5-10 years, the product is likely to take the stock valuation to about $40-$90 a share.

"Seen another way, each 1 million units of Powerwall sales (assuming a price $350/kWh, 30 percent gross margin, capitalized at 10x) would be worth around $10bn, $72 per TSLA share (145mm shares), or around 30 percent of Tesla's current share price," the analysts explained.

"By 2029, we estimate Tesla's 6.4m unit global fleet will contain the stored energy capacity of 410 GW, a figure roughly equal to the entire daily electricity consumption of the nation of Mexico," Morgan Stanley added.


GLOBAL EQUITIES RESEARCH

Analysts at Global Equities Research reiterated an “overweight” rating and set a $385.00 price target on shares of Tesla in a research note on Monday. Global strategist, Trip Chowdhry says that Tesla is likely to see a $10 billion revenue by 2017 from its new stationary batteries. The analyst added that Tesla will have a capacity of about 10GWh to 13GWh and assuming the company sells 100,000 85KWh automobiles in 2017, the cars will consume only 8.5GWh of capacity, implying the remaining 1.5GWh could go into the Stationary Residential batteries.

The math behind the $10 billion figure is as follows: "Assuming 15KWh Stationary Battery and then multiply with one million units = 1.5GWh. Conservatively, assuming an average selling price of $10,000 gives a revenue opportunity from Residential Batteries of $10 billion for Tesla in 2017."  Chowdhry states that Tesla will face no competition in the space.

Posted to Dr. Stoxx Options Letter on May 05, 2015 — 8:05 AM
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