Harriet Lefton

About the Author Harriet Lefton

Harriet originates from the UK where she worked as a journalist specializing in the metal markets. She graduated from the University of Cambridge before becoming a qualified UK lawyer.

Analysts Cautious on Tesla Motors Inc (TSLA) Following Gigafactory Tour

Analysts are cautious in their outlook for automaker Tesla Motors Inc (NASDAQ:TSLA) following a tour of the company’s Gigafactory in Nevada. The Gigafactory recently commenced mass production of the new ‘2170’ battery cell that will power its pipeline all-electric Model 3 vehicle. Here we look at what three different analysts are saying about the Gigafactory and why all three analysts recently gave Tesla a hold rating:

Oppenheimer- Hold

Top Oppenheimer analyst Colin Rusch has been busy musing on the Gigafactory. Although in the long-term he finds potential for Tesla stocks to go higher, Rusch is currently cautious over the significant risks involved in the factory’s ramp-up to production.

Rusch writes “Management focused on TSLA improving manufacturing density and velocity as key to the company’s success over the long term. We would agree with management and believe GM over the coming quarters will be an early indicator of how the company is doing on that front.”

But he warns that even though Tesla is off to a good start, “the magnitude and complexity of what TSLA is trying to accomplish over the next two years along with the potential bottlenecks remains sizeable.”

Rusch, who has a four-star rating on TipRanks with an 8.6% average return, reiterated his hold rating for Tesla on Jan 5 without a price target. This accords with the ‘hold’ analyst consensus rating for Tesla on TipRanks.

Berenberg Bank- Hold

Berenberg Bank’s Paul Kratz seemed slightly more optimistic on Tesla’s outlook, although he too reiterated his Tesla hold rating on Jan 11.

“After showing analysts its Gigafactory plant in Nevada last week, the company again emphasised the competitive advantages this brings to Tesla… as the battery cost leader” says Kratz. Tesla believes that it should be relatively better positioned to capture upside in electric vehicle (EV) adoption because traditional OEMs lack such large battery capacity.

Although the company may see itself as the key catalyst for the transition to EV mobility, Kratz points out that “a spate of recent EV launch announcements by OEMs such as Volkswagen (VW), Daimler and General Motors (GM) puts some doubt on Tesla’s claim that competitors lack EV models”.

Nonetheless, Kratz does concur that there is relatively more visibility for Tesla because “it is likely to have the most significant EV production capacity in the foreseeable future due primarily to its battery production capabilities.”

Goldman Sachs- Hold

Analyst David Tamberrino from Goldman Sachs was encouraged to hear that production is ‘on track’ at the Gigafactory. Tesla is aiming to reach 35GWh of cell production and 50GWh of pack capacity by 2018.

Tamberrino told clients that “Tesla was confident it “could sell every Model 3 that it makes.” Further, the company continued to focus on manufacturing gains that it believes it can achieve by “making the machine that makes the machine.”

However, Tamberrino was also quick to point out that crucial details on timing, capex requirements, and vehicle cost reductions remain sparse. He too reiterated his hold rating for the stock on Jan 5.

Consensus

The analyst consensus rating on TipRanks is hold while the average analyst price target of $235.57 is a marginal 3.32% upside from the current share price of $227.99.

 

  • G1B

    Tesla is on the top of innovation for electric cars in tech, design, and production. Tesla is the only electric car maker gearing up to manufacture cars that are composed of 95% American made parts with thousands of American jobs. Tesla is the only electric car maker whose cars are more in demand than any other brand of EV car maker. Tesla is the only car maker that has built and continues to build an infrastructure of recharging stations allowing for travel to basically any where an ICE car can go in the US, Europe and Asia. The charging infrastructure alone is a formidable commitment in construction and funding against initial revenue. Tesla is showing the world that we can use the never ending source of the sun to power our society with clean energy. This comes with a unique vision that is materializing. I’m not only an obvious fan but I could care less what the rumor mill casino on Wall Street thinks will happen to Tesla. What’s obvious is analysts or bloggers who keep writing shallow pieces of doubting the ability of Tesla to hang in there have no idea what is in the making, no idea of the demand of the public desire, just doing cut and paste work, or are just tools of the fossil fuel industry.

  • ROBwithaB

    I have no respect for any analyst who fails to state a price target and date.
    Just state your prediction, so that we can measure your performance once the date has passed.
    Or just admit that you don’t know.

    Interestingly, my own portfolio is outperforming every single one of these analysts.