Tesla hits record after analyst sets $400 target

James Albertine at Stifel Nicolaus says investors' enthusiasm for the stock is like a 'freight train.'

By MSN Money Partner Sep 2, 2014 1:28PM
Credit: © Justin Sullivan/Getty Images
Caption: A sign for a Tesla showroom in Palo Alto, Calif.By Tomi Kilgore and Claudia Assis, MarketWatch

Shares of Tesla Motors (TSLA) rallied to record-high levels on Tuesday after Stifel Nicolaus analyst James Albertine turned bullish on the electric car marker, citing a "sizable head start" with respect to production over any potential rivals.


Albertine set a $400 price target on Tesla's stock, which implies a further 48 percent rally from Friday's closing price of $269.70. He raised his rating to buy after being at hold for a little more than a year.


He compared investors' enthusiasm for Tesla stock with a "freight train."


Albertine's price target is now the highest of the 16 analysts surveyed by FactSet, and well above the average price target of $259.62.


Friday's close was a record closing high, and Tesla shares set a fresh intraday high above $284 on Tuesday. The stock has gained 85 percent this year, compared with an 8.5 percent gain for the Standard & Poor's 500 Index ($INX).


The latest rally follows upbeat second-quarter results, which included news the electric car maker was on target to achieve an annual rate of production of 100,000 cars by the end of next year, double its current rate. More inroads made in China also contributed to the string of records.


"While there are no fewer than a half-a-dozen other key concerns we share with industry purists, the reality is, these issues simply do not matter with respect to (Tesla's) stock," Albertine wrote in a note to clients. "(Tesla) sentiment is like a freight train, in our view, benefiting from a well-manicured growth story that has caught the eye of a much broader investor base relative to most auto stocks."


Some of the risks Albertine sees include the lack of available evidence of management's claims with respect to battery pack durability and the fact that Tesla has never generated even one-sixth of the per-share profitability based on 2016 earnings expectations. The looming construction of Tesla's battery factory and uncertainty around continued Model S demand in the U.S. also weighed.


Tesla's stock has gained 82 percent since Albertine placed a hold rating on it on Aug. 21, 2013, compared with a 22 percent rise in the S&P 500 over the same time.


After recently hosting a tour of Tesla's production facility in Fremont, Calif., Stifel's Albertine said the rate of change in unit-per-week production since his last tour in May 2013 was "staggering."


"We sense [Tesla] may be currently running at an 800 unit/week production rate," Albertine wrote. "Stacks of finished goods inventory (front bumpers, battery packs, various body panels) suggests the demand backlog remains strong."


Tesla will eventually face stiffer competition from traditional car makers and will reach a ceiling of consumer support. But it was clear from the recent factory visit and conversations with investors, customers and management that such concerns are, at the earliest, late-decade issues at best, Albertine said.


The analyst added that his call does not hinge on the "gigafactory" or pricing and volume expectations for Tesla’s mass-market car for 2020 and beyond.


"We are focused on the Model S and X alone. We are simply more optimistic of (Tesla's) success as a 'slightly bigger than niche' global luxury auto manufacturer, and like the head start management has carved out for the brand."


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Tags: TSLA
16Comments
Sep 2, 2014 3:45PM
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V_L is a broken record, for sure.  I have asked him about 20 times where he advises people to put their investments, or where he puts them, since he is always against anything written.  He has never responded, and to me this proves his lack of validity and identity as a simple troll with too much time on his hands.  I agree that he should be blocked, or at least the volume of his posts be limited in some way.  Maybe no more than one on each thread. 
Sep 3, 2014 2:01AM
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I'm a long-term investor in Tesla that's been with them since their IPO, but would really enjoy seeing the eneloop division of Panasonic, (since they were bought out from Sanyo) join forces with Tesla...those 4th generation eneloop rechargeable batteries are truly amazing.  Perhaps an adaptation down the road will enable this teamwork to become a reality?         
Sep 2, 2014 5:00PM
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These "analysts" are just blowing smoke.
Sep 3, 2014 11:44AM
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"- Economic growth depends on the productive use of investment and rejuvenation of "capitalistic animal spirits," but that's not taking place now, said , manager of the world's largest bond fund, in his latest investment outlook letter on Wednesday.

"Economic growth depends on the productive use of credit growth, something that is not occurring," said Gross, who manages the $223 billion Pimco Total Return Fund.

Gross said the U.S. Federal Reserve, the Bank of England and other major central banks are now engaged in an "unmodeled experiment" which involves: "What growth rate of credit is enough to pay prior bills, and what policy rate/amount of Quantitative Easing is necessary to generate that growth rate?"

$$$

Well said, Bill. Our choices are clear-- confiscate the markets and redirect it to enterprise, end the Federal Reserve, get RID of Wall Street and- close all banks, flush out the pariah in them, reconcile, regulate and revive ONLY limited to the state they HQ in. Irrational irresponsibility is not an American Ideal.

Sep 2, 2014 5:07PM
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You can not be competitive when a battery can not push a very heavy car around the German 14 mile up hill down hill and wicked curves . A new lithium at 3x the power is in the works and one that will be another three times the power is on the drawing board. Batteries are heavy .

Toyota might strike with a hydrogen fuel cell before the battery rumor makes it all the way around the track for Teslas 150 K by then. Tesla still a coach maker !

Sep 3, 2014 11:49AM
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When Tesla makes a car someone making $18,000 annually in unstable employment can afford, they should let us know. 
Sep 2, 2014 6:19PM
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I think this stock is the perfect example of 'irrational exuberance'.

All this talk of 'investor sentiment' is just nonsense.  Telsa still isn't turning a profit!  So, how exactly does this analyst assign a price to a money pit!?

Keep in mind, the local kids running a lemonade stand making $200 per year are more profitable than Tesla, because Tesla in the red.  MSN shows Tesla's profit at -6%.

With so many other profitable companies to choose from, why would anyone put their money into this?
Sep 3, 2014 11:48AM
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Who invests in this crap instead of dinner or a basic roof over their head? 
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