Tesla Motors Inc could be an interesting long-term play for investors, reports Zacks Investment Research. The electric car maker’s stock not only has decent short-term momentum, but solid upward earnings revisions should sustain that out performance in the medium term.
Zacks argues that these positive earnings estimate revisions are suggestive of the fact that the analysts’ community is finally becoming more optimistic on Tesla Motors’ earnings prospects for not just the next few quarters, but the current year as a whole. In fact, the consensus earnings estimates for both these time frames have moved sharply higher over the past four weeks, making Tesla “a solid choice for investors.”
Tesla Current Quarter and Full Year Estimates
During the past four weeks, the earnings revision trend has been promising for Tesla Motors Inc . The consensus of analysts’ covering the stock has narrowed from a loss of $1.12 per share a month ago, to a loss of 60 cents per share as of today – an upward jump of 46 percent.
Meanwhile, Tesla Motors’current year numbers are also looking quite favorable. The average analysts’ estimate is now for a full-year loss of $2.21 per share, compared to a loss of $2.67 per share four weeks ago – an increase of 17 percent.
Wall Street bullish on Tesla Motors
A total of 22 Street analysts cover Tesla Motors Inc stock. Of these, 10 have a “Buy” rating on the stock. 7 suggest a Hold, while the remaining 5 analysts think the stock is a “Sell” at current levels.
The 12-month consensus price target price is $305.38. The stock is currently trading around the $255-level, providing an upside potential of about 20 percent.
Adam Jones at Morgan Stanley has the most bullish outlook. The analyst expects Tesla Motors stock to shoot up to $465 in the next twelve months or so.
On the other end of the spectrum is Ryan Brinkman at JP Morgan. He has an “Underweight” rating on the stock with a 12-month target of $178.
Regardless, a majority of Wall Street analysts remain bullish on the stock because of a number of growth catalysts. The recent surge in the stock is in anticipation that the Model X, slated for launch on September 29, will give the car maker’s bottom-line a healthy boost.
Moreover, the completion of Tesla Motors Inc ’s Gigafactory should also provide the firm with an edge. Jefferies expects Tesla’s changes in cell chemistry to reduce battery costs by up to 50 percent by 2020. This will result in a 10 percent increase in gross margin. As such, cars like the $35,000 Model 3 can become viable products. Jefferies recently raised its 2020 gross margin estimates and also upped its target price for the stock.