According predictions to market research firm Macquarie Research, the shares of electric car maker Tesla can rise by as much as more than 70 per cent even as the firm started of the coverage of the firm with an outperform rating.
"We view Tesla as a disruptive technology growth company with differentiated products and strong brand presence in the secularly growing and equally disruptive markets of electric vehicles, energy storage, and energy generation," Macquarie analyst Maynard Um said in a note to investors.
"Tesla appears on track for production targets & should be able to achieve profitability" in the second half of this year," Um said.
The first price target that Macquarie gave for investors for Tesla shares was at $430 a share which was at a 72 per cent high compared to the closing price of the share at $250.56 a share as on Monday. The target p[rice of the shares is also $10 a share more than the figure that was quoted Tesla CEO Elon Musk in his now infamous tweet for taking the company private.
There was a 5.3 per cent increase in the shares of the company as of Tuesday.
The argument that Um have for putting such a high price target on the shares of the company was based on the assumption that there is enough cash with Tesla "to get over the debt maturity hump”. The multiple sources of cash flow that lies at the hand of Tesla will help the company to smoothly tide over the debt challenges, he said. In the second half of 2018, the electric car maker will get anything between $500 million and $600 million in revenue from clean energy government credits, according to the estimates of Macquarie. Access to $1.2 billion in unused debt and good sale of Model 3 would also boost the cash flow situation of the company, the firm also added.
The analyst however was not convinced with the comments of Musk who had said on earlier occasions that Tesla does not require to raise more capital. The analyst believes that raising more capital can be a good idea for the company. "We believe a raise through equity would be beneficial in further strengthening its longer-term outlook as well as providing a cushion in case of any unexpected periods of economic softening."
According to Macquarie, it is important for investors to view Tesla as a tech company instead of a traditional auto manufacturing company and therefore follow the dynamics of the tech market.
Um also believes that a section of the investors must also be "understandably concerned" by the unconventional behaviour of Musk as a CEO.
"Musk's actions and behaviour could adversely impact Tesla's multiple," the analyst wrote. But "Musk will continue to be a key part of Tesla in the foreseeable future."
(Source:www.cnbc.com)
"We view Tesla as a disruptive technology growth company with differentiated products and strong brand presence in the secularly growing and equally disruptive markets of electric vehicles, energy storage, and energy generation," Macquarie analyst Maynard Um said in a note to investors.
"Tesla appears on track for production targets & should be able to achieve profitability" in the second half of this year," Um said.
The first price target that Macquarie gave for investors for Tesla shares was at $430 a share which was at a 72 per cent high compared to the closing price of the share at $250.56 a share as on Monday. The target p[rice of the shares is also $10 a share more than the figure that was quoted Tesla CEO Elon Musk in his now infamous tweet for taking the company private.
There was a 5.3 per cent increase in the shares of the company as of Tuesday.
The argument that Um have for putting such a high price target on the shares of the company was based on the assumption that there is enough cash with Tesla "to get over the debt maturity hump”. The multiple sources of cash flow that lies at the hand of Tesla will help the company to smoothly tide over the debt challenges, he said. In the second half of 2018, the electric car maker will get anything between $500 million and $600 million in revenue from clean energy government credits, according to the estimates of Macquarie. Access to $1.2 billion in unused debt and good sale of Model 3 would also boost the cash flow situation of the company, the firm also added.
The analyst however was not convinced with the comments of Musk who had said on earlier occasions that Tesla does not require to raise more capital. The analyst believes that raising more capital can be a good idea for the company. "We believe a raise through equity would be beneficial in further strengthening its longer-term outlook as well as providing a cushion in case of any unexpected periods of economic softening."
According to Macquarie, it is important for investors to view Tesla as a tech company instead of a traditional auto manufacturing company and therefore follow the dynamics of the tech market.
Um also believes that a section of the investors must also be "understandably concerned" by the unconventional behaviour of Musk as a CEO.
"Musk's actions and behaviour could adversely impact Tesla's multiple," the analyst wrote. But "Musk will continue to be a key part of Tesla in the foreseeable future."
(Source:www.cnbc.com)
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