New Street Research analyst and Tesla Inc TSLA bull Pierre Ferragu is of the opinion that investors who hold the automaker’s stock should book some profits ahead of the S&P inclusion, Barron’s reported Wednesday.
The Tesla Analyst: Ferragu downgraded Tesla from Buy to Hold and maintained the price target of $578 even though he opined the shares are likely to hit $1,200 in 2025.
The Tesla Thesis: “We expect Tesla to trade at 75 [times] forward earnings in 2025, “ wrote Ferragu.
By 2025, Ferragu expects the Elon Musk-led company to be in what he terms hypergrowth. By the following year, he foresees Tesla shipping 2.8 million vehicles a year, which is 500,000 more than what it shipped in 2020. This implies the Palo Alto-based automaker would grow annually at nearly 33%.
Ferragu’s last call to upgrade the stock in October to Buy was made when the stock was trading at nearly $425 and his price target of $578 was the highest at the time.
Tesla’s stock gained 48% since the decision to add the company to the S&P 500 index was made, which is a factor in Ferragu’s current prudential call, noted Barron’s.
The automaker’s stock has rallied 622.49% on a year-to-date basis and nearly 800% over the year.
Price Action: Tesla shares closed nearly 7% lower at $604.48 on Wednesday and fell 2.23% to $591.02 in the after-hours session.
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