Tesla (TSLA - Analyst Report) is once again hitting new 52 week highs. Today the stock has lifted through the $133 level and looks to continue its rise into the stratosphere.
The move today might be based on a new price target from Northland Capital. They moved their target from $95 to $230. That is some kind of move!
The rationale behind the move is a 25x multiple of 2020 EPS of $18.47 and that is discounted back five years at a 15% rate.
It includes a few assumptions, like the successful introduction of the Gen 3 model which is more SUV than car. The analyst also believes that the addressable market for the electric car maker get to 9M vehicles annually by 2020.
The bump from 20,000 cars in 2013 to 9M might be more than most can swallow, but there is no doubt there is some big demand for these cars right now. The big question is will it stay that way?
Make no mistake, after the first profitable quarter TSLA will report a few more money losing quarters, but full time profitability might be just around the corner. Recently, 2013 estimates ticked higher from a loss of $0.77 to a loss of $0.68. At the same time, 2014 estimates moved lower, from a gain of $0.61 to $0.50. The downward move in 2014 estimates is likely keeping this stock a #3 and not a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy).
Price targets aside, do you think that this Zacks Rank #3 (Hold) stock is worth a gamble now that neat term estimates have started to tick higher?