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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.
▪ 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 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.