Sunday, January 29, 2023

Tesla stock at $ 780? It could happen, says Goldman Sachs

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Talk about an upgrade.

Tesla received a major boost last week as analysts of Goldman Sachs moves the stock from neutral to buy, dropping their 12-month price target from $ 455 to $ 780.

This capped a slew of positive news for the company, including fifth consecutive quarter of earnings, the announcement that it would be added to S&P 500, and of course Elon Musk being named FortuneBusinessman of the Year.

Goldman analysts cited a few reasons for their change of mind. They believe EV adoption is picking up steam due to falling battery prices faster than expected, combined with an increase in regulatory proposals to limit or ban the sale of combustion engines. internally over the next decades. As a result, analysts “now expect electric vehicles to account for 18% of global sales in 2030 and 29% in 2035 (with 50% adoption in 2035 in the US and Western Europe)”.

The entrance Biden administration also bodes well for Tesla’s outlook. “Using the previous Obama plan of ~ 55 MPG in business average fuel economy by 2025 as a starting point for analysis, we believe businesses may need a double-digit percentage of sales from electric vehicles to comply with stricter emissions standards (especially if there is no bonus treatment for EVs in the calculation), ”the report says. Additionally, Goldman analysts also suggest Tesla’s Energy and full self driving (FSD) business may be worth more than expected.

While Goldman’s $ 780 price target may seem overly bullish to some, they’re not the only ones feeling bullish. Wedbush analyst Dan Ives also upgraded the stock last week, set a bull case objective of $ 800 to $ 1,000 on TSLA shares (His 12-month goal, meanwhile, is lower than Goldman’s at $ 560). As my colleague Anne Sraders wrote, “demand for electric vehicles” is really starting to decline, especially in China, “says Ives.Fortune.He notes that globally 3% of auto sales are electric vehicles and “We think the potential is now 10% by 2025. With Tesla clearly being the leader, we think China could represent 40%. % of sales by 2022, compared to 15% today. . ”

To be sure, every Tesla analyst report is filled with caveats and risk factors, and as my colleague Shawn Tully has written extensively for Fortune, there are fundamental questions about Tesla’s business model and his excessive dependence on the business of selling emissions credits.

That said, the Goldman report also highlights how difficult it has been to bet against Tesla this year. Analysts write they downgraded the stock in June after Tesla cut prices more than expected and there were reports of manufacturing issues with the Model Y. “This concern about a The growth slowdown in 2H20 was incorrect, and since our downgrade on 6/11/20, the stock is + 192% versus the S&P 500 + 22%, ”they wrote.

More to read absolutely financial cover of Fortune:


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