Tesla checks all the boxes: growth, industry disruption, environmental approach, and market undervaluation, Credit Suisse said on Monday, upgrading the electric-vehicle stock to outperform.
Analysts Dan Levy and Trevor Young affirmed their $1,025 target price on the Austin company.
The analysts said in a report that they expect Tesla to continue to grow its car sales while maintaining its profit margins. Their earnings estimates are some 25% above the Wall Street consensus for the years 2022 through 2024.
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"Tesla remains the leader of the multidecade secular transition to electric vehicles," the analysts said in a report.
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"With less question around demand and much more question around supply of electric vehicles, Tesla should be a key beneficiary. It has a product lead vs. others and has taken the most holistic approach on electric vehicle supply."
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At the beginning of the month, Tesla stock touched just under $1,200. On Monday, the stock currently is trading up 4.6% at $885.50. The target price set by Levy and Young indicates 21% upside from Friday's close at $846.
"With robust fundamentals ahead and with the stock having been caught in the market decline, we believe the stock should recover," they wrote.
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"Where we could be wrong:. ... Tesla's underperformance year to date, down 20% versus down 7% for the S&P 500, can be explained by a market that has punished growth.
"Year-to-date, value stocks have relatively outperformed by 12%, while growth stocks, for example, Tesla, have underperformed by 7%. As any positive outlook on Tesla must use a long-term valuation, a risk to our call is that rising rates pressure secular growers."
