Tesla (NASDAQ: TSLA) is once again in the news with a lofty new price target. Specifically, the Wall Street firm JMP Securities are now targeting a TSLA price of $1060. This represents an almost 40% upside from the current TSLA price.
JMP Securities sets a $1060 price target on TSLA
Moreover, JMP Securities are also giving Tesla an “Outperform” rating. According to JMP Securities, Tesla is growing at a compound annual rate of roughly 23%.
This impressive growth will allow Tesla to produce roughly 2 million vehicles a year by 2025, according to JMP Securities. Joseph Osha, a JMP Securities’ specialist in the Technology sector with a 60.00% success rate, is decidedly bullish on TSLA.
According to Osha, JMP Securities’ Tesla 2021 model is only moderately “above consensus”. However, when JMP extrapolates its forecast for Tesla, it appears the stock is currently trading below where it should be. Osha notes that this means Tesla stock should trade higher in 2021, according to StreetInsider:
“Interestingly enough, revisions to our 2021 model put us only moderately above consensus. But a look at the longer-term potential for TSLA’s growth suggests the stock should be more highly valued on the 2021 outlook than it currently is.”
Osha’s TSLA 2021 valuation is not as high as it may seem
Specifically, Osha says that according to 2021 estimates, Tesla carries a valuation of almost 20 times its projected earnings. Although this can sound like a lot, the average for the S&P 500 is roughly 18.2 times.
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As such, Tesla’s current stock price is not as astronomically high as some would portray it as being. Osha explains JMP Securities’ reasoning in the recent TSLA valuation of $1060.
“To be specific, we argue that the stock should be valued at 32x EV/EBITDA and 5x EV/ Revenue based on 2021 estimates, with the resulting valuation discounted back one year at 10%.”
The coronavirus could be a good investment opportunity
This is why Osha is now giving a Tesla stock valuation of $1060 per share. His TSLA 2021 valuation will likely increase even further if Tesla manages to weather the coronavirus. This seems possible – work on Tesla Giga Shanghai’s “Phase 2” for Model Y production is already underway.
What’s more, Tesla’s tree-felling activities at its Giga Berlin site are done, and could see a March 19th groundbreaking. In other news, Tesla has now begun shipping Model Y SUVs to its Delivery Centers ahead of customer deliveries.
Moreover, Osha even portrays current coronavirus concerns as a potential opportunity for investors looking to buy TSLA on the cheap. “Investors may find themselves with additional near-term opportunities to buy the stock as Tesla works through the first half of 2020, and the impact of COVID-19 becomes apparent,” Osha adds.