Deutsche Bank Sees Eventual Resolution Of NHTSA's Tesla Investigation, Believes Findings Will Be 'Benign,' Maintains Buy

Shares of Tesla TSLA are bouncing modestly Tuesday afternoon following a tough last week. The stock has fallen from $137.80 at the close of last Tuesday's session to around $125.25. Traders and investors in the name have been digesting news of a probe by the National Highway Traffic Safety Administration. While Elon Musk has been defending Tesla and the Model S vehemently over the last few days (see his Twitter account, Wall Street analysts have been less eager to comment. Deutsche Bank's Dan Galves, issuing a note Tuesday morning, has been one of the first analysts to weigh in. Traders may have initially viewed the Galves note as cautious; the analyst suggested the probe could be an overhang for Tesla shares until the NHTSA publishes results in 60 days or less. He insists the conclusion by the Safety Administration will be "benign." Galves noted Tesla management has offered a software fix which would disable a Model S's air suspension while a vehicle is traveling at highway speeds, effectively raising the car and increasing ground clearance. The Deutsche Bank analyst believes the NHTSA will probably accept this fix and production/costs will not be impacted much. Galves reiterated his stance the fires "are rare occurrences and the timing was coincidental," noting "if this was going to be a common issue, you would expect to have seen one in California, where the vast majority of Model S miles-driven have occurred to-date..." Deutsche Bank's Galves maintains a Buy rating and $200 price target on shares of Tesla amid the investigation. Shares of Tesla are up nearly 3 percent heading into the last hour of close Tuesday.