Oppenheimer analyst Colin Rusch said cost reductions and simplifications in the group's manufacturing base, as well as expanded production runs linked to the start of operations in Berlin and Austin, Texas, should support Tesla shares even after last years 700% surge that valued the group at more than $800 billion. Rusch lifted his price target by $550, to $1,036 per share, based on "85x 2025E EPS, discounted two years at 10%, in line with EV and artificial intelligence peers."
Investors will be looking for indications that data from Tesla's self-driving system will increase safety and accelerate the roll-out of FSD vehicles in the coming years, while seeking insight on costs linked to its battery cell production.
"We believe investors are grappling with where shares go from here ... and believe bulls are betting on Tesla leading commercialization of autonomous vehicles technology," Rusch said. "Tesla's efforts simplifying manufacturing have seen significant success and will continue, especially with volumes scaling, and that mix should be a tailwind given higher level of Model S/ X and China-based sales."
"Given production expected to start in Berlin and Austin this year, we are watching timelines and capex numbers closely given potential complications from COVID-19 slow down and unique process equipment, notably for larger molds and battery materials," he added. "We expect Tesla to ramp this equipment but would not be surprised by delays due to technological or logistical complexities."
Tesla shares were marked 1.1% higher in pre-market trading Wednesday to indicate an opening bell price of $853.60 each, a move that would take the stock's three-month gain to around 102%.