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Tesla (TSLA) Stock May Still Be Undervalued by 45%, Analyst Says

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For so long, Tesla (TSLA) was so far ahead of the competition in the luxury-electric market, it saw nothing in its rearview mirror. But recently, other luxury automakers — include Mercedes, BMW, Audi and Jaguar — have been creeping up on the incumbent, with recently or soon-to-be released luxury EVs. While some analysts and investors have expressed concern over growing competition, Tesla is actually still maintaining its wide lead. Not only is Tesla winning the branding game, but the company has actually proved that it’s doing something better than any competitor — battery life.

3-star JMP analyst Joseph Osha believes that "Tesla’s leading competitive position in the electric vehicle market supports [his] positive stance on the stock.” He calls competitors’ (specifically Audi’s) product launches “weak,” which makes him “even more confident that Tesla can hold on to its leading position.” 

As a result, Osha rates TSLA stock an Outperform along with a $337 price target, which implies about 45% upside from current levels. (To watch Osha's track record, click here)

Audi’s new e-tron SUV starts at $74,800, less than Tesla’s Model X at $84,990 (without incentives), but has a range of 204 miles, which is also less than the Model X, at 325 miles. Further, Tesla generates 115 miles of range in only 15 minutes charge, compared to Audi at 54 miles for 10 minutes. Given the performance difference, it doesn’t come as a surprise that Audi only sold an average of 628 units per month in the US this year (according to InsideEVs), while Tesla has sold more than double of the Model X per month, at 1,461. 

But while Osha thinks Tesla is outpacing its competition, he is looking at Tesla leadership and believes “now is a good time to...consider how it might be improved.” The analyst says it is “difficult to understand how Elon Musk’s failure to develop a stable team of executives can be rationalized as typical or acceptable Silicon Valley founder behavior,” given how the likes of Google, Microsoft, Amazon and Facebook all were able to do so. Osha says it is “time for the company to truly empower an operating executive to work alongside Musk.” 

While he remains bullish on the stock, Osha is keen on”change at Tesla.” He says the board “faces a formidable task in retaining Musk while moving him into a more appropriate role,” and believes “the board would do better to look at other successful founders and acknowledge that improvement is needed at Tesla.” 

Perhaps Tesla’s management team is one reason why many analysts are hesitant to recommend TSLA. TipRanks analysis of 27 analyst ratings shows a Hold consensus, with eight analysts saying Buy, six suggesting Hold and not less than 14 recommending Sell. The average price target among these analysts stands at $251.33, which represents about 7% upside. (Click here to see Tesla’s price targets and ratings on TipRanks)