Piper Sandler More Than Doubles Tesla Price Target, Sees 'Most Consequential Company' In Mobility
Tesla Inc (NASDAQ: TSLA) can generate operating margins in the mid-20s due to its full self-driving software, according to Piper Sandler.
The Tesla Analyst: Alexander Potter maintained an Overweight rating for Tesla and raised the price target from $939 to $2,322.
The Tesla Thesis: Tesla’s stock has appreciated by 260% year-to-date, taking its market cap past $280 billion and making the company the world's most valuable automaker, Potter said in a Monday note. (See his track record here.)
That doesn't mean it's time to sell the stock, the analyst said.
“Tesla is the most consequential company in the mobility ecosystem, and this is unlikely to change in the next decade.”
Tesla has indicated the possibility of 30% gross margins if more customers opt to purchase the company's FSD software, he said.
Given that the FSD package is a high-margin offering, Tesla could sell vehicles at or even below cost by the 2030s, boosting its operating margins, Potter said. The analyst further projected that Tesla could earn a mid-20s operating margin by 2040 even if less than half of its users opt in for FSD.
For the near-term, the key driver for Tesla's earnings are deliveries, and they remain higher than expected, he said.
Tesla could reach nearly 4 million deliveries in 2025, implying a market share of about 7% in China and 9.5% in the U.S., according to Piper Sandler.
TSLA Price Action: Tesla shares were down 0.88% at $1,483.92 at the time of publication Tuesday.
Related Links:
10 Biggest Price Target Changes For Tuesday
11 Consumer Cyclical Stocks Moving In Tuesday's Pre-Market Session
Photo courtesy of Tesla.
Latest Ratings for TSLA
Jul 2020 | Piper Sandler | Maintains | Overweight | |
Jul 2020 | Roth Capital | Upgrades | Sell | Neutral |
Jul 2020 | Morgan Stanley | Maintains | Underweight |
View More Analyst Ratings for TSLA
View the Latest Analyst Ratings
See more from Benzinga
BofA Cuts Carnival Target, With Slow Cruise Line Recovery Ahead
Morgan Stanley Raises Apple Price Target On iPhone Trade-In Opportunity
Fed's Income Test Threatens KeyCorp Dividends, BofA Says In Downgrade
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
