Tesla Inc (TSLA): Analyst Highlights Competitive Advantages at Play

Guggenheim's Rob Cihra believes TSLA's leading technology and Gigafactory are key, not-so-secret weapons.


Tesla Inc (NASDAQ:TSLA) made some waves yesterday with CEO Elon Musk’s empire’s next aim for outreach: the company’s first electric semi truck. Fun side project brewing for this electric car giant or serious dabble that could disturb the whole trucking industry? One bull says with every truck maker scrambling to bring their take on an electric vehicle to the table, this market is very “real,” and Tesla is entering the game with some powerful arsenal on its side.

Guggenheim analyst Rob Cihra acknowledges that “skeptics” will take some convincing that an electric semi truck could “haul more than its own batteries around,” but his odds are firmly on Musk’s “important competitive weapons to an EV Class 8 truck market” to win the race.

On back of the new semi truck, the analyst maintains a Buy on Tesla stock with a $430 price target, which represents a nearly 36% increase from current levels. (To watch Cihra’s track record, click here)

As far as Cihra is concerned, this marks far “more than just some science project but rather another new performance/ cost vector for EVs vs. traditional transport (this time vs. long-haul diesel trucking) that can further leverage the technology and manufacturing infrastructure Tesla has been building.”

Total cost of ownership is supposedly 15% to 20% cheaper than traditional diesel trucks, and if then add on “meaningfully better performance,” the analyst cheers. Investors should expect to see the new semi by 2019, and Cihra anticipates, “Tesla developing the Semi with input from established fleet operators likely means customers with orders will be waiting.”

At last night’s event, Tesla had another surprise up its sleeve, a revamped Roadster: “A bonus, Tesla also unveiled a refresh of its original Roadster, targeting production in 2020, designed to be the fastest production car ever made with 0-60 mph acceleration in 1.9 seconds and a huge 200kWh battery pack enabling 620 miles of range.”

Two features at Tesla’s advantage that excite Cihra the most boil down to standout battery/pack engineering coupled with “manufacturing SCALE of the Gigafactory” along with the strength of in-house self-driving software capabilities. This kind of technology should find a leg up with the data gathered from trucking, which includes driver-cost-reduction in prospective convoy applications, Cihra contends.

Not related to the semi news, the analyst lessens his 2018 EPS expectations from ($0.89) to ($1.25) due to delayed Model 3 margin leverage along with corporate expenses while maintaining his forecast looking for a 95% year-over-year surge in revenue to $23 billion. By 2019, the analyst predicts Tesla’s EPS will exceed $13, and shoot past $19 by 2020.

Most on the Street are not in Cihra’s bullish corner when it comes to Musk’s tech brainchild, with TipRanks analytics exhibiting TSLA as a Hold. Based on 21 analysts polled by TipRanks in the last 3 months, 5 rate a Buy on Tesla stock, 8 maintain a Hold, while 8 issue a Sell on the stock. The 12-month average price target stands at $320.27.

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