4 Tesla Analysts On Battery Day, From Bull To Bear: 'An Inherently Risky Move'

Analysts are out with their reactions to Tesla Inc's TSLAhighly anticipated Battery Day

The Tesla Analysts: Piper Sandler analyst Alexander Potter has an Overweight rating on Tesla with a $515 price target.

Needham analyst Rajvindra Gill has an Underperform rating. 

Credit Suisse analyst Dan Levy has a Neutral rating and $400 price target.

Wedbush analyst Daniel Ives has a Neutral rating and $475 price target.

The Tesla Advantage: The Battery Day showed off the continued strength of Tesla, said Piper Sandler's Potter.

“The event did a good job of summarizing the reasons why Tesla’s advantage is insurmountable,” the analyst said. 

Credit Suisse's Levy said that ambitious vertical integration plans can unlock cost reductions on multiple fronts.

This is “another reminder Tesla is well ahead of other automakers in the push to electric vehicles,” the analyst said. 

Wedbush's Ives said the company will see significantly lower battery expenses, adding that this will help Tesla’s margin leverage and lead to the promised $25,000 vehicle. 

“The battery production cost targets were staggering, which if achieved would be a potential game changer for the company’s cost structure and price points going forward,” the analyst said.

The new costs set Tesla well apart from competitors down the road, he said. 

Tesla said it plans to produce 20 million cars annually.

Piper Sandler's Levy said this target is 40x Tesla's present annual volume and twice that of Toyota Motor Corp TM, the largest auto maker in the world.

Gene Munster of Loup Ventures said the lower vehicle price will make it “progressively more difficult for traditional auto to compete.”

Manufacturing Key For Tesla: “The biggest driver of Tesla’s success in its strategy will be its ability to successfully ramp manufacturing,” Levy said.

The new technologies will not be easy to ramp up, the analyst said. 

A lot of work is needed by Tesla to make its ambitious battery technology goals happen, he said. 

“The success of Tesla’s battery strategy will rest on its ability to successfully ramp manufacturing,” Levy said.

Needham's Gill questioned whether vertical integration will make or break Tesla.

“We have three years to find out,” the analyst said. 

Challenges Ahead For Tesla: “While we applaud the company’s ambitious plans, we believe it is an inherently risky move with steep execution and operational challenges,” the Needham analyst said. 

He sees challenges ahead due to the need for Tesla’s manufacturing to scale.

Tesla's Valuation: Tesla shares have increased over 400% in 2020.

“We do not believe the company has sufficient earnings leverage to justify its high multiple,” Gill said.

Tesla is trading at higher multiples than both technology and automakers, the analyst said, adding that Tesla is “priced to perfection.”  

Shares could go lower if production numbers or performance and cost goals for the new batteries are not met, according to Needham. 

Piper Sandler's Levy said investors will sell the news, as the new lower-priced car is three years away.

TSLA Price Action: Shares of Tesla traded down in after hours during the Battery Day event.

“The stock’s vertical move over the past year sets the stage for investors to expect immediate results,” Munster said of the stock. 

Tesla shares were down 10.25% at $380.75 at the time of publication Wednesday. 

Photo courtesy of Tesla. 

Posted In: Alexander PotterBattery DayCredit SuisseDan LevyDaniel Iveselectric vehiclesEVsGene MunsterLoup VenturesNeedhamPiper SandlerRajvindra GillWedbushAnalyst ColorPrice TargetReiterationTop StoriesAnalyst RatingsMoversTrading Ideas