Tesla Motors (TSLA) Stock Hits Five-Month High After Deutsche Upgrade

NEW YORK (TheStreet) -- Tesla Motors  (TSLA) hit a five-month high of $263.74 on Monday after Deutsche upgraded the electric car maker to "buy" and set a $310 price target, up from $220.

The firm believes Elon Musk's company can deliver steeper growth. “Tesla suggested that their growth trajectory will be much steeper, their mix will be much richer and their costs will ultimately be much lower than we previously assumed,” Deutsche wrote in a research note. The firm added Tesla could deliver 60,000 cars in 2015 and 100,000 in 2016, which would be 18% and 67% more, respectively, than Deutsche previously expected.

Tesla plans to ramp up its annual production capacity to 50,000 cars by the end of 2014 and double that to 100,000 units by late 2015. The company also intends to increase sales by expanding shipments of its Model S sedan to China and other international markets, as well as adding the Model X electric sport-utility vehicle in early 2015.

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The stock closed up 4.51% to $259.32, its highest end-of-day price since $254.84 on March 4.

Separately, TheStreet Ratings team rates TESLA MOTORS INC as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate TESLA MOTORS INC (TSLA) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • TSLA's very impressive revenue growth greatly exceeded the industry average of 23.5%. Since the same quarter one year prior, revenues leaped by 89.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, TSLA's share price has jumped by 88.02%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • TESLA MOTORS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TESLA MOTORS INC continued to lose money by earning -$0.71 versus -$3.70 in the prior year. This year, the market expects an improvement in earnings ($1.16 versus -$0.71).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Automobiles industry. The net income has significantly decreased by 102.9% when compared to the same quarter one year ago, falling from -$30.50 million to -$61.90 million.
  • The debt-to-equity ratio is very high at 2.57 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • You can view the full analysis from the report here: TSLA Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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