JMP Securities analyst Joe Osha is now more optimistic about Tesla Inc.’s stock than ever, and his reasons are about the potential of the electric vehicle manufacturer in the coming years, not about the stock’s inclusion in the S&P 500 index.
Osha raised his price target by 53% from $ 516 to $ 788, the highest he’s ever had on Tesla. His new target is 21.3% above Monday’s closing price of $ 649.86. Osha reiterated his market outperform rating, which he has been on the stock since Oct. 22, after Tesla reported third quarter results.
The stock TSLA,
bounced 0.8% in premarket trading Tuesday. On Monday, the first day as an S&P 500 SPX,
member, the stock had fallen 6.5% after a 11.6% rise two days before entry into a record Friday, in trading moves often referred to on Wall Street as “buy the rumor, sell the fact.”
Osha said he based his investment position on Tesla on the idea that he must look “a few years ahead” to 2025 to have a reasonable idea of what Tesla could become.
“As we’ve seen the business evolve over the past six months, our target of 2.5 million units by 2025 for delivery seems increasingly plausible,” Osha wrote in a note to customers. “Now, as we leave the year, and we revise [Tesla’s] competitive position, both the market opportunity and [Tesla’s] potential shipments look bigger than we thought. “
So he raised his 2025 unit delivery target to 3.05 million vehicles. And that new vision was what prompted him to raise his price target.
Nowhere in Osha’s note, sent to customers on Monday, did he mention the inclusion of the S&P 500.
Osha’s optimistic outlook makes him a Wall Street minority. Of the 37 analysts surveyed by FactSet covering Tesla, 32% have the equivalent of a buy rating, 38% have the equivalent of hold, and 30% have a sales rating.
Also read: Tesla price target gets 28% boost at Wedbush, but not enough to recommend.
His price target of $ 788 is 83.8% above the average price target of $ 428.77, which is 34.0% below Monday’s close.
FactSet
Osha’s more optimistic view of Tesla isn’t just company-specific. He now expects total battery-electric vehicle (BEV) shipments to account for 15.7% of global vehicle sales by 2025, up from his earlier estimate of 14.0%.
He thinks Tesla will capture about 45% of the addressable BEV market by 2025, which is in fact lower than his current estimate of 54%.
“Given the pace at which we see policy evolving, we can envision further fine-tuning our BEV industry numbers in the coming years,” Osha wrote.
Tesla’s stock is up 676.7% this year through Monday, while the S&P 500 is up 14.4%.