Tesla Motors Inc. (NASDAQ:TSLA) can add Credit Suisse to its growing list of enamored analysts who are downright bullish on the electric vehicle (EV) maker’s stock and future; in fact they see Tesla as being the bull to the traditional automakers’ china shop.
Credit Suisse initiated coverage on Tesla Motors Inc. (NASDAQ:TSLA) yesterday with an ‘Outperform’ rating, and a $325 price target for the stock, which currently rests in the $260 range. That followed a similar evaluation last Wednesday by Pacific Crest, which started their coverage of Tesla Motors Inc. (NASDAQ:TSLA) with the same ‘Outperform’ rating and a $316 price target.
However, as Jon C. Ogg reported on 24/7 Wall Street, the glowing recommendations and price targets clearly fly in the face of traditional valuations and seem to be borne of a mixture of hype and potential. As he pointed out, Tesla Motors Inc. (NASDAQ:TSLA) now has at least half the market cap of both Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM), and trades at 80 times its expected 2015 earnings, compared to 8 times and 9 times for Ford and GM respectively.
Is Tesla simply a bubble stock that will eventually pop? Or do analysts have legitimate reasons for their love of Tesla Motors Inc. (NASDAQ:TSLA), which will eventually bear out? In the case of Credit Suisse, they provided a detailed explanation of why they not only feel Tesla’s electric vehicles will win the war with internal combustion engines (ICE), but why it won’t even be a fair fight.
Among their reasons are the fact that Tesla’s are roomier because of bearing less parts, that they control better because of their higher center of gravity, that they will provide huge fuel savings, and that they use their power more efficiently. In their estimation, EV’s are “inherently better” than ICE’s.
Yet the fact remains that for the time being, all of that is still little more than potential. And not many stocks get the kind of generous pass on the potential that Tesla is getting.