Tesla (NASDAQ: TSLA) has received some of its first outlooks from financial firms for 2021. Deutsche Bank is one of these firms, and the Wall Street-based company boosted its 2021 delivery guidance and revised its price target for the electric automaker.
Deutsche Bank went into the New Year paying close attention to Tesla’s 2020 delivery figures, as the company was chasing a lofty, but attainable, 500,000 vehicle production and delivery goal. Tesla released its Full-Year 2020 and Q4 2020 production and delivery figures on Saturday, revealing that it had attained its goals. For many years, Tesla has looked at 2020 as the year it would deliver half-a-million cars to its consumers, and many analysts looked at the company in doubt and disbelief, only to be proven wrong when the time came.
After Tesla’s remarkable 2020 showing, Deutsche Bank believes 2021 could be “pivotal” for the company’s future “with material revenue acceleration, benefitting from ramping up capacity and product lines across the globe.”
Tesla’s PT raised to $705 at Deutsche Bank$TSLA
— David Tayar (@davidtayar5) January 4, 2021
Deutsche Bank said that it had raised its 2021 delivery forecast by 25,000 cars, from 775,000 to 800,000, “taking revenue to $46bn, in-line with consensus,” analysts at the firm wrote in a note to investors. “Mid-term, we believe Tesla’s impressive target trajectory for its technology, capacity, and especially cost could help accelerate the world’s shift to electric vehicles and extend Tesla’s EV lead considerably,” the note also stated.
Tesla was, without a doubt, the big winner in the automotive industry in 2020. Only ten major automakers were able to report positive numbers in Q3 2020 compared to Q3 2019, and Tesla was the only one that was able to report substantial growth when comparing the two figures. After a 154.7% growth from Q3 2019 to Q3 2020, according to GoodCarBadCar, it was evident that EVs are here, and the ones that dawn the notorious Tesla “T” on the hood are the most popular.
It seemed like 2020 was a lost cause at the beginning of Q2 because Tesla was already forced to shut down Giga Shanghai in China and the Fremont Factory in Northern California due to the COVID-19 pandemic. Fremont, Tesla’s main facility, was closed for around a month and a half, which cause the automaker to report sub-100,000 numbers for the second quarter of the year. Many people considered it a lethal blow to Tesla’s 500k goal, but the automaker pulled out one of the most remarkable production and delivery pushes that it will likely ever see in its history.
Deutsche Bank is still banking on 2025 being Tesla’s breakout year, with a revenue of $94 billion and more than 2 million cars delivered during that year. However, near term forecasts still see significant growth in production and demand taking place, especially considering Tesla has two large-scale production facilities in the works in Texas and Germany.
Tesla also received a price target boost from $500 to $705, which is “based on the average of 50x our 2025 EPS (discounted back) and EV/sales multiple of 17.5x 2022 (vs. prior 12x) as we believe investor enthusiasm for high-quality pure EV plays and expected confirmation of ongoing technology lead by Tesla should continue to support higher valuation.”
Disclaimer: Joey Klender is a TSLA Shareholder.