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New Street Research raised Tesla's (NASDAQ: TSLA) price target to $1,298 as the company delivered impressive results in Q3 2021, despite a number of challenges, and citing strong growth prospects.
New Street Research published a note in which it increased its price target to $1,298 based on the following:
▪ 29% Auto gross margins, approaching twice the typical auto manufacturer, despite finalizing 2 new production sites, supply constraints, FSD move to subscription, ASPs declining 6% YoY, and FX.
▪ Annualized production run-rate of 1 million cars achieved towards the end of the quarter; Berlin & Texas coming online by year-end.
▪ Long duration growth thesis strengthened by material development in FSD roll-out, Insurance, and 4680 new battery cell & pack architecture. The firm's long-term thesis is playing out.
▪ New Street Research expects shipments of 2.3m and non-GAAP EPS of $17.3 in 2024 and for the stock to continue to trade in the 50-100x range.
▪ New target price of $1,298 = 75x 2024 Earnings
The firm's model of deliveries is 20% above consensus by 2024.
Production capacity:
▪ U.S.: Fremont at full capacity today (600k). Texas fab to ramp towards 500-600k by 2024.
▪ Asia: Shanghai ramping to full capacity, production in September of ~ 50k (600k run-rate). Potential for second Asian factory to be built in coming years.
▪ Europe: Berlin fab to begin production late 2021 and ramp to full capacity (500-600k) by 2024.
Deliveries: growing> 50% p.a. on average over the coming years, in line with Tesla commentary, towards 2.4m by 2024.
20% upside vs. consensus by 2024: potential for 1.9 million and 2.3 million deliveries by FY'23 and FY'24, respectively. Consensus models 1.5 million and 1.9 million.
In addition, New Street Research emphasized:
- Auto revenues will exceed ~ $100 billion in 2024
- The firm sees ~ 45-50% upside to consensus EPS beginning in 2022
- Expect Tesla to sustainably trade in 50-100x P/E rang
- Tesla delivered 241k vehicles in 3Q21 with minimal Model S/Model X contribution
- Energy sales up close to 40% year-on-year
- Solid cash flow despite sustained capex ramp to build out capacity
© 2021, Eva Fox | Tesmanian. All rights reserved.
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About the Author
Eva Fox
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.
