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Tesla's share price does not reflect its long-term growth potential, Edward Jones said. The firm does not set a price target and upgrades its rating to Buy from Hold.
Jeff Windau of Edward Jones upgraded Tesla to Buy from Hold for the first time. The firm does not set a price target, as it does not do so at all. The analyst wrote in a note to clients that Tesla's current share price does not reflect the long-term growth potential of the maker, which is a leader in electric vehicles and has a clear advantage over competitors.
Windau pointed out that the new product launch will allow Tesla to take advantage of the expanding electric vehicle market. He wrote that Tesla has a movement that is both up and down relative to the market, which is partly due to changes in investors' views on the company's future, which depends on the growth of the EV market.
“We believe Tesla's new product launches will allow it to take advantage of this expanding market. Tesla has above-average price movement, both up & down relative to the market, due in part to shifts in investor views about the future of the company, which depends on growth in the EV market.”
The analyst pointed out that software or subscription programs are particularly important to Tesla as they are expected to become more profitable. Its Full Self-Driving (FSD) continues to improve and at the moment all FSD owners in North America have the opportunity to receive the FSD Beta test software, which has unique features. The more developed the software becomes, the more customers will want to have it, and the company will be able to increase its purchase price.
“Programs that have software or ongoing subscriptions, such as full self-driving, are especially important for Tesla, as they are expected to be more profitable. Additionally, Tesla is working to improve manufacturing efficiency and reduce costs.”
Windau also stressed that governments continue to impose increasingly stringent vehicle emissions requirements, which continue to drive growth in the EV market. Under these circumstances, Tesla's launch of new products this year, such as Cybertruck and Tesla Semi, will boost sales.
“Global regulations on emissions & mileage are driving the growth of EVs. We believe the launch of new products, such as the Cyber truck and Semi-truck in 2023, will help drive sales growth.”
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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.