Tesla (NASDAQ: TSLA) analysts from several Wall Street firms are adjusting their price targets based on the company’s forecast for overwhelming growth in the coming years. Today, Baird analyst Ben Kallo boosted his price target by 25% from $360 to $450, citing significant long-term upside potential for gross margin and credit revenue.
The price target comes as TSLA stock enjoys a six-day streak of finishing a trading session in the black. While this is far from a company record, which stands at eleven straight days, the six-day streak is still impressive. The surge in price is likely based on the company’s recent release of its Q3 delivery figures.
On October 2nd, Tesla released its third-quarter delivery figures, showing a company record of 139,300 deliveries during the three-month period. Additionally, the electric automaker recorded a total production rate of 145,036 cars during Q3, which is another company best.
Kallo, who holds a 61% success rating and an average return of 11.7%, according to TipRanks.com, cited that Tesla’s regulatory credits could be “a significant swing factor” for the company’s future quarters. He also believes the company’s outlook, which shows credit revenue could roughly increase by 100% in 2020, is conservative.
“With share prices at current levels, we think [Tesla] may no longer be incentivized to maintain strict cost controls (particularly on the OpEx line) and could reprioritize investment in growth,” a note to investors from Kallo said, according to MarketWatch.
So far, in 2020, Tesla stock has skyrocketed to over five-times its price from the first trading day of the year, exploding to over 451% its January 2nd price. During the six-day winning span, 11.4% of that growth has occurred.
Interestingly, Kallo has seen more investors looking at TSLA stock from a long-term perspective. While the growth in 2020 has made many investors gain a considerable amount of wealth, the cutting edge technology that Tesla has developed so far in terms of vehicles is not what is manipulating its growth.
Instead, long-term projects, like battery production and vehicle autonomy, are what the true investors and believers in Tesla are looking toward.
“We have experienced increased inbound interest in TSLA, particularly deciphering the bull/bear case from here,” Kallo added in the note. “Interestingly, we have found investors increasingly focused on 2025+ blue-sky scenarios, in stark contrast to a few months ago when the primary focus was on the upcoming quarter.”
Becoming a large-scale battery manufacturer and leading the self-driving charge in the coming years is where Tesla’s valuation will continue to skyrocket, and many analysts have misvalued the automaker in this sense. Instead of looking at Tesla as a software, battery, EV, and energy company, many analysts look at it as a simple carmaker.
At the time of writing, TSLA stock was trading at $453.13.
Disclaimer: Joey Klender is a TSLA Shareholder.