Tesla (TSLA) surprised Wall Street in its latest quarterly statement, but that in itself is unsurprising; the EV leader has made a habit of leaving analysts’ forecasts in the dust.
Still, Morgan Stanley’s Adam Jonas believes the latest set of excellent results were “significant” for two particular reasons.
For one, despite well-documented industry-wide supply shortages, the company is exhibiting “extraordinary” top line growth,” with sales now annualizing at 1 million units and Tesla reaching that milestone “easily” 6 months ahead of Jonas’ expectations.
This is even more impressive when put into context. IHS data shows that global Q3 auto production dropped by 19.8% year-over-year. “In this environment,” notes Jonas, Tesla 3Q sales were UP 73% YoY.”
The second reason is the company’s “industry leading profitability.” With a 23% Adj. EBITDA margin, the EV maker sits at the summit of high-volume automotive OEM margins (sans Ferrari).
What is even more impressive as that this is all happening in one of the most difficult supply chain environments the industry has ever experienced, with the company notching more than $10,000 of EBITDA per car.
This potent mix of “better-than-expected growth and margins under difficult industrial circumstances,” provides Jonas with an opportunity to adjust his forecasts so they more closely align with Tesla’s; the company’s target is an annual ‘long term’ growth rate of over 50%.
Before the latest print, Jonas forecast for unit volume growth between 2021 to 2030 stood at 23%, actually below the 26% growth the analyst estimates for the whole EV market. However, Jonas now expects Tesla’s unit volume CAGR in the same period to be around 28%, i.e., the analyst now expects Tesla’s growth to exceed that of the industry.
By 2030, then, Jonas now thinks Tesla will be able to deliver 8.1 million units instead of the 5.8 million previously expected, “driven by lower ASPs and significant global plant expansion,” beyond Austin and Berlin.
To this end, Jonas reiterates an Overweight (i.e. Buy) rating on TSLA, while attaching a Street-high price target of $1,200. The implication for investors? Upside of 17% from current levels. (To watch Jonas’ track record, click here)
As per usual, Jonas’ opinion is just one of many varied Tesla takes on Wall Street; based on 12 Buys, 8 Holds and 7 Sells, the stock has a Hold consensus rating. The price target forecast is a downbeat one; at $756.25, shares are expected to lose 17% of their value over the next 12 months. (See Tesla stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.