Market Overview

Analysts Divided On Battery Outlook For Tesla

Analysts Divided On Battery Outlook For Tesla

Bears see Tesla Motors Inc (NASDAQ: TSLA)'s plan to unveil new home and utility-scale battery products Thursday as an effort to divert attention from its struggling core business.

But bulls say the business could add $100 a share to the company's stock price within five years.

Tesla, up about 25 percent in the past month, traded recently at $231.89, up $1.30.

Apart from long-term battery prospects, Barclay's Brian Johnson warned recently that Tesla shares may drop once the formal announcement is made Thursday.

"There could be a 'sell on the news' reaction," Johnson said, noting a selloff that followed Tesla's announcement in October of all-wheel drive vehicles and "semi-autonomous" driving capacity.

Johnson maintains an Equal-Weight and $190 target on Tesla.

Related Link: 4 Questions: Could Tesla Sell Off Following Thursday's Event?

Bank of America's John Lovallo called the planned announcement "a well-timed effort to shift investor attention away from a struggling core auto business."

Lovallo maintains an Underpeform rating and $65 target on Tesla, and said meaningful profits for Tesla in the home and utility scale battery business is, at best, "many years off."

Tesla's lithium ion battery technology may face competitive disadvantages for utilities, while the market for home storage related to solar power may be limited, given homeowners' ability to sell excess power back into the grid, Lovallo said.

"Tesla's stock is due for a reality check," Lovallo said.

But Deutsche Bank's Rod Lache said the business could add $100 to Tesla's share price by 2020, although Lache added that automotive growth remains Tesla's core enterprise.

Significant growth lies ahead for the stationary battery storage industry although it's still "in its infancy," Lache said.

"It could provide a cushion to numbers if Tesla falls short" on automotive production, according to Lache, who rates Tesla at Buy with a $245 target.

Credit Suisse's Dan Galves, who maintains an Outperform rating and $290 target on Tesla, figures the battery business could be worth up to $40 a share.

"More visibility on this business could lead to additional valuation support," Galves said.

Latest Ratings for TSLA

Jan 2021WedbushMaintainsNeutral
Jan 2021Edward JonesInitiates Coverage OnHold
Jan 2021Credit SuisseMaintainsNeutral

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