Could Tesla Inc (NASDAQ:TSLA) have an industry disrupter on its hands with the forthcoming debut tonight of the new electric semi truck? From the cautious to the bullish, Street-wide intrigue is captivated by what CEO Elon Musk and Co. has in store for the trucking industry.
Bernstein analyst David Vernon notes that in an industry where 43% of marginal operating costs stem from labor, self-driving technology of the likes of Musk’s electric car giant have the capacity to shake things up in the trucking-verse.
All the same, an electric autopilot truck does not have smooth roads ahead, and with an uphill trajectory ahead that might outweigh the company’s advantages, the analyst maintains a Market Perform rating on TSLA stock with a price target of $265, which implies a just under 16% downside from current levels. (To watch Vernon’s track record, click here)
From Vernon’s perspective, “The gains from automating heavy truck activity have far reaching implications across the broader transportation landscape. Companies in our coverage that will benefit from this include UPS (high cost union truck labor in line haul and feeder operations), FedEx (truck intensive ground network), J.B. Hunt (across services). Companies that could be at risk from trend are the rails (lower TL rates) and the brokers (like C.H. Robinson which will need to shift its model from labor arbitrage to something else). While these conclusions are supported by today’s note, we advise investors to keep in mind that the ultimate impact on truck v. rail competition will not be determined by how truck economics change in a vacuum, but will instead also be impacted by how the rail and intermodal industries can also benefit from further automation.”
Nomura analyst Romit Shah notes that it matters a great deal who rules the self-driving technology leaderboard. True, the semi truck is generating buzz for Tesla, but for Shah, the most bullish introduction of all could be brand new self-driving technology from the empire, solidifying investor confidence all the more.
AS such, the analyst reiterates a Buy rating on TSLA stock with a $500 price target, which represents a close to 59% increase from where the stock is currently trading. (To watch Shah’s track record, click here)
Ultimately, “Leadership in self driving is important,” Shah concludes, asserting: “Autopilot is an option that increases revenue per vehicle sold; however, its real significance goes beyond a spreadsheet. We believe there is a real fervor for the brand that will translate into significant revenue growth. Tesla is recognized for incorporating next-generation technologies such as an electric powertrain, responsive infotainment, and autonomous driving capabilities that provide a great user experience. We anticipate that Tesla’s autonomous driving capabilities will be critical to sustaining the strong affinity for the brand.”
Most on the Street lean toward Vernon’s stance of hedging bets when it comes to the giant’s opportunity, considering TipRanks analytics exhibit TSLA as a Hold. Out of 21 analysts polled by TipRanks in the last 3 months, 5 are bullish on Tesla stock, 8 remain sidelined, while 8 are bearish on the stock. With a return potential of nearly 2%, the stock’s consensus target price stands at $320.27.