Goldman Sachs analyst Mark Delaney, a Tesla bull, raised his price target to $1,125 from $905 a share. Bears aren’t budging.
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Tuesday evening, Goldman Sachs analyst Mark Delaney raised his Tesla price target to $1,125 from $905 a share. He is a Tesla bull, rating shares of the electric-vehicle giant at Buy. After deliveries, earnings, and Hertz news, Tesla bulls are doubling down, raising price targets for Tesla stock. The bears aren’t really budging, though. That means the Tesla division is at an all-time high.
The bump is helping Tesla (ticker: TSLA) stock. Shares are up 2.4% in early Wednesday trading. The S&P 500 index is up about 0.1%. The Dow Jones Industrial Average is down about 0.1%.
Delaney raised his target to $1,125 after Hertz (HTZZ) ordered 100,000 Tesla vehicles for its rental fleet. EVs will make up more than 20% of the Hertz fleet after all the cars are delivered. Hertz also said it will supply 50,000 Tesla vehicles to Uber Technologies (UBER) drivers.
Delaney increased his 2022 and 2023 full-year earnings-per-share estimates by about 65 cents and $1.50, respectively, to $9 and $10.50, excluding stock-based compensation, which the Street usually backs out when communicating Tesla earnings estimates.
The increase isn’t only for Hertz, but overall business strength. Hertz “news is important for Tesla,” wrote Delaney in his report. “It will help the company to sustain strong growth and margins when considering the order in the context of other dynamics.” Those other dynamics include additional fleet sales and the opportunity to earn more money for its charging assets as the installed based of Tesla fleets grows.
With Delaney’s bump, the average analyst price target is about $755 a Tesla share. The average price target has about $89, or 13% since the end of September.
The top 10 analyst price targets, including Delaney’s, are up about $132 a share since the end of September. The bottom 10 target prices are up only about $36. The spread between the high-targets and low-targets is about $775. That’s $775 billion in market cap—a gap twice the value of Toyota Motor (TM).
Tesla’s recent results, which include beating third-quarter delivery estimates, beating third-quarter earnings estimates and starting fleet sales, resulted in more separation between the Tesla bulls and the Tesla bears.
Understanding Tesla valuation can be difficult, given the bull-bear spread.
Bears believe Tesla is a growing, valuable car company and should be valued like a car company. The average of the bottom-10 price targets is $313, which still makes Tesla the world’s most valuable auto maker, and pegs Tesla stock trading at about 39 times estimated 2022 earnings. The S&P 500 has a 20 times multiple.
Bulls believe that Tesla is disrupting the entire automotive business—like when Apple (AAPL) disrupted flip phones. They also believe Tesla has additional revenue opportunity selling autonomous-driving software and battery storage for residential and utility customers.
Write to Al Root at [email protected]
