Credit Suisse Names Tesla Top Automotive Stock Pick

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Analysts at Credit Suisse have selected Tesla Motors as a top pick in the Automotive and Auto Parts sector, saying their target price for the stock is $325 over the next 18 months to 2 years, reports Bidness Etc.

The analysts are impressed most of all by the benefits the Tesla GigaFactory will bestow upon the company. They expect the cost of batteries for Tesla automobiles will continue to decline, making Teslas price competitive with their gasoline powered rivals by 2017. That parity¬†should boost sales and fatten Tesla’s profit margins, they think. On the flip side of things, analysts at Standard & Poor recently assigned Tesla stock “junk” status, which as you might have inferred, is a bad thing. Yet Morgan Stanley thinks Tesla is primed to be a big contender in the auto industry.

Overall, the analysts say the worldwide car market amounts to about a trillion dollars a year. Since Tesla features such disruptive technology, they reason that it should be able to command a significant portion of that market. They also think that the arrival of the long awaited Model X crossover later this year will give a big boost to Tesla’s earnings.

Two days after Credit Suisse made its predictions public, Tesla revealed that it lost $108 million in the fourth quarter of 2014. In addition, it says deliveries of its Model S electric sedan in America were flat for the year, though it built a record number of vehicles in the Q4. Disappointing sales in China have also been featured in the news lately.

After the conference call with investors on February 11, Tesla stock closed down 4% for the day, including after hours trading, though it’s back up over $200 this morning. Thus continues the stock market roller coaster ride.

 

Steve Hanley

Closely following the transition from internal combustion to electricity. Whether it's cars, trucks, ships, or airplanes, sustainability is the key. Please follow me on Google + and Twitter.