After spending a week in Berlin touring Tesla’s new Gigafactory, Deutsche Bank analyst Emmanuel Rosner is feeling even more upbeat on Tesla stock.
Here are the key details of a new bullish note from Rosner on the EV maker:
Price Target: $375
Upside Assumed: around 24%
Tesla stock movement on Monday midday: Down around 1% amid broader market pressure on high-beta stocks
“We hosted investors last week in Berlin for a guided tour of Tesla’s new Gigafactory, test drives of the Model Y Performance at high speed on the Autobahn, and a meeting with Head of IR Martin Viecha,” Rosner wrote. “We came away with the sense that Tesla’s new localized vehicle production in Europe could be a game-changer, making Tesla to an even more formidable competitor in the region, while likely boosting the company’s gross margins. The plant is already capacitized to produce 500k Model Y per year, but currently only staffed with 2 shifts; Tesla plans to increase to 4 shifts and full production sometime in 2023.”
From the Yahoo Finance Live Archive: Rosner talking Tesla on July 5
He added that the company acknowledged production risk related to a potential gas crisis in Germany amid the Ukraine-Russia war while also asserting that the company has flexibility in terms of global vehicle production.
“More broadly, Tesla commented that demand for its vehicles remains strong, outpacing its ability to supply,” Rosner added. “This is certainly the case in the US, and could become even more acute after the [Inflation Reduction Act] takes effect in January 2023. … our view is that it can see solid benefit from IRA and potentially qualify for 3 large sources of subsidies: tax credits to EV buyers (up to $7,500 per vehicle), subsidies to EV battery cell producers in the US ($35/kWh), and subsidies to US producers of battery modules and packs ($10/kWh). All in, we believe 2023 could be a pivotal year for Tesla and continue to view it as one of the most attractive stories in the autos sector.”
Deutsche Bank estimates that Tesla is “on track for 1.4 million units for the full year, which is up 50%,” the note stated. “And they’ve also done an incredible job pricing up for some of the raw materials pressure. And so we think the margins could actually look good going forward.”