Tesla Shares to Rise 30% by Year-End 2011, Analysts' Report Says

By Danny King August 11, 2010

Tesla Motors shares may jump as much as 30 percent by the end of next year as the electric Tesla-Motors-logo.jpg-vehicle maker will likely attract investors because of its relatively inexpensive lithium-ion battery packs and plans to launch its Model S sedan, as well as more stringent environmental regulations from the government that will boost demand for electric vehicles, two analysts wrote in a 38-page report to clients and reported on by Edmunds' Green Car Advisor.

 

With Tesla set to debut the Model S in 2012, the company's revenue will jump to about $1.8 billion in 2013 from about $100 million this year, J.P. Morgan analysts Himanshu Patel and Vivek Aolek wrote in the research note. Additionally, Tesla's bottom line will be helped by a Model S battery pack whose cost is about half those of other battery makers, the analysts wrote.

As a result, J.P. Morgan put an "overweight" (similar to a "buy") rating on the stock and set a December 2011 price target of $25 a share, up from about $19 today.

"Tesla spends a fraction of what global auto peers spend to develop a new vehicle, and does it relatively fast," Patel and Aolek wrote in the note. "While Tesla is clearly effectively putting all its eggs in one basket, its sole focus on pure EVs should help it better conquer technical challenges and also keep costs low."

Tesla last week said its second-quarter loss more than tripled to $38.5 million from a $10.8 million loss a year earlier as costs rose faster than revenue. Sales increased 5.4 percent to $28.4 million.

Tesla, which went public June 29 at $19, has said it won't be profitable until it sells substantial numbers of the $56,500 Model S. Its $109,000 Roadster has moved about 1,200 units over the past two years.

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