A couple of the most bullish Tesla Inc (NASDAQ:TSLA) analysts on Wall Street just got even more bullish this morning.
Brad Erickson and Elliot Arnson of Pacific Crest boosted their price target on TSLA on Tuesday to $439 per share. That represents an approximate 26.5% upside above the stock’s current trading levels.
The catalyst, says the firm is simple: Tesla’s upcoming launch of its first mass market vehicle, the Model 3 sedan.
Until now, Tesla’s been exclusively a luxury carmaker, producing vehicles for the so-called wealthiest “2%” of of people on earth. Given that the Model 3’s price will start at $35,000, it represents the company’s biggest chance to become a hit with Main Street America.
Erickson and Arnson note that sentiment on the stock is “hitting the moon” right now in anticipation, but buyside analyst expectations for the new vehicle are actually quite low and could fall further. In a note to clients, they said that “Perception of future demand is as important as actual deliveries (maybe more important). If the car is perceived as awesome, already-low 2H17 buy-side expectations will actually fall.”
While Tesla’s sky-high valuation now is based on little except hope, the firm expects this exuberance to fade in the longer term. As its business model matures, investors should begin to evaluate the company on demand, growth and profitability — which could actually exceed expectations.
Tesla Inc shares were trading at $352.29 per share on Tuesday morning, up $4.97 (+1.43%). Year-to-date, TSLA has gained 64.86%, versus a 9.49% rise in the benchmark S&P 500 index during the same period.