New Street Research analyst Pierre Ferragu is a longtime supporter of Tesla (NASDAQ: TSLA), although he has a fairly level-headed outlook on stock prices. The firm upgraded Tesla to Buy rating and raised its price target from $578 to $900 per share.
Tesla shares are down more than 37% from their January high. Despite the decline in Tesla's share price, Ferragu wrote that as a result of their recent analysis, the firm's confidence in the manufacturer for the coming two years has grown significantly:
"As much as the market severely corrected the recent excesses of optimism reflected in Tesla's valuation, our recent work strengthened our confidence about the solid outlook for the company in the next 2 years."
Ferragu pointed out that by 2023, Tesla will be able to supply two million vehicles, which will provide profit growth twice as much as current expectations. “Tesla will be in a position to deliver 2 [million] units in 2023 and deliver earnings of $12, more than 50% above current expectations,” he wrote.
With better-than-expected earnings coming, according to analysts, he believes the stock will trade for the higher end of his expected price-to-earnings ratio range of 50 times to 100 times. "Tesla [is] the #1 stock we recommend buying in this pullback."
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About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.