Credit Suisse: Tesla Motors Inc (TSLA) Stock Has 49% Upside

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The Tesla Motors Inc (TSLA) stock price has been known to fluctuate. With 52-week lows around $181/share and 52-week highs exceeding $286/share, TSLA currently trades comfortably in the middle of that range, in the mid-$220s.

Credit Suisse: Tesla Motors Inc (TSLA) Stock Has 49% UpsideBut if analysts at Credit Suisse are right, Tesla shares are in for another wild swing. The research firm has given TSLA stock a price target of $325, a 49% premium to Tuesday’s closing price of $218.25.

Investors didn’t take long to process the report, and TSLA stock price was up as much as 5% at the time this report was written.

Let’s take a look at just why Credit Suisse is so bullish on the electric car company.

Tesla 4Q Deliveries

Credit Suisse believes TSLA will be able to deliver 17,000 vehicles in the fourth quarter of 2015, just over the 16,883 it needs to meet its 50,000 vehicle goal for the full year.

While those numbers won’t be officially available until January, they’re some of the most watched metrics at the company right now — especially since there have already been some Model X production hangups and the company’s own delivery goals have been lowered several times throughout the year.

Also, as TSLA stock owners know, the company currently isn’t profitable; so until it starts churning out earnings consistently, Tesla’s delivery count will remain the key metric in focus.

But does that really explain Wednesday’s 5%-plus rally?

Not entirely.

A bigger boost came from some optimistic math Credit Suisse laid out: If TSLA can sell 36,000 Model X vehicles in FY2016, per-share earnings can reach $7. For context, consensus estimates currently call for a $1.19 per-share loss this year and positive EPS of $1.86 next year.

Admittedly, EPS of $7 in 2016 may be a little euphoric. Credit Suisse actually believes EPS next year will be $4/share, driven by a higher-margin Model S and lower development expenses.

TSLA, like most growth stocks with insane multiples, trades for a steep premium because the company’s past results are expected to be dwarfed by future successes. Hence why Amazon (AMZN) and Netflix (NFLX) can routinely lose money and still see their stock prices rise meteorically.

In other words, today’s buyers of TSLA stock are betting that the company will execute on its goals down the line. That’s been a glaring problem for Tesla in the past — the Model X was delayed for two years — so it’s good to hear a respected Wall Street firm give a vote of confidence.

With Tesla’s first true mass-market vehicle, the Model 3, scheduled to be unveiled in late March 2016, next year is shaping up to be a make-or-break year for the automaker and its stock.

Investors should be warned, however, that at prices like these (TSLA shares go for 121 times forward earnings), one misstep could send shares tumbling.

While TSLA stock is too risky for my taste, it might be right for those with high risk tolerance and a willingness to sit on their hands through huge swings up and down.

As of this writing, John Divine was long AMZN stock. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/11/tesla-motors-inc-tsla-stock-price/.

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