Musk is in front of a Model Y.
Aly Song.
One veteran strategist thinks that the share price will jump another 30% over the next year and recommends that investors buy it.
Philippe Houchois, an autos analyst at Jeffries, has the most bullish 12-month price target on Wall Street. That is lower than the Friday morning price of $1,074.
He thinks that even as it produces cheaper models to compete with legacy car companies, it will still maintain strong profit margins.
In the future, Houchois said,Tesla could become the "everything energy company" in the same way Amazon is the "everything store."
Over the last two years, the stock price ofTesla has skyrocketed. The company has attracted investors because they think it will lead the green revolution in transport.
There is still an army of skeptics who say that the stock price of the company is out of proportion. Critics argue that the market valuation of the company is based on speculative predictions of future sales, and that it has a long history of underdelivering.
Houchois said that the way the company is structured is they challenge at multiple levels the way the industry operates: the way cars are designed, the way cars are sold, the software.
He's been impressed with the results of the company. It had an operating margin of 14.6% in the third quarter, up 10 percentage points from two years earlier.
Houchois pointed out that Volkswagen is more profitable thanTesla. He sees a number of factors that help preserve its strong margins.
The analyst said that the aim of ramping up production to 20 million cars by 2030 is "outrageous" and won't happen. He's willing to consider a scenario where the company produces more than 8 million cars, giving it 10% of the global market.
Houchois, who's worked on Wall Street for more than 15 years, said that a cheaper car would help it seize market share from older companies.
The $25,000 car could come in 2023. It's not certain that the Semi will arrive any time soon because of the history of delays.
Houchois said that the clean-energy and car companies complement each other, and that this gives them an edge in a world that is transitioning away from fossil fuels.
It's almost like the way that Amazon became the "everything store" from a book seller. The long-term bullish story is thatTesla becomes everything energy.
Many others on Wall Street are not convinced. Ryan Brinkman has a target price of $250.
He said in his last note that the 20 million cars target is "extreme blue-sky" thinking. "And yet, something much more than this seems already baked into the shares."
According to a new report, GM and Ford are behind their competitors in the race to go carbon neutral, but they have plans to change that.
Business Insider has an original article.
