Analyst Joe Osha at JMP Securities is now more bullish on Tesla Inc.â€™s stock than ever, and his reasons are about the electric vehicle makerâ€™s potential over the next few years, and not about the stockâ€™s inclusion in the S&P 500 index.
Osha raised his stock price target by 53% to $788, the highest heâ€™s ever had on Tesla, from $516. His new target is 21.3% above Mondayâ€™s closing price of $649.86. Osha reiterated his market outperform rating, that heâ€™s had on the stock since Oct. 22, after Tesla reported third-quarter results.
The stock TSLA, -6.49% bounced 0.8% in premarket trading Tuesday. On Monday, its first day as an S&P 500 SPX, -0.39% member, the stock had dropped 6.5% after spiking up 11.6% two days before inclusion to a record on Friday, in trading action often referred to on Wall Street as â€œbuy the rumor, sell the fact.â€
Osha said he has based his investment position on Tesla on the idea that he needs to look â€œa few years out,â€ to 2025, to have a reasonable idea of what Tesla might become.
â€œAs we have watched the company evolve over the past six months, our 2.5 million unit delivery target for 2025 has looked increasingly plausible,â€ Osha wrote in a note to clients. â€œNow, as we exit the year, and we review [Teslaâ€™s] competitive position, both the market opportunity and [Teslaâ€™s] potential shipments are looking larger than we thought.â€
So he raised his 2025 unit delivery target to 3.05 million vehicles. And that new view is what prompted him to increase his stock price target.
Nowhere in Oshaâ€™s note, which was sent to clients on Monday, did he mention the S&P 500 inclusion.
Oshaâ€™s bullish view makes him a minority on Wall Street. Of the 37 analysts surveyed by FactSet who cover Tesla, 32% have the equivalent of a buy rating, 38% have the equivalent of hold and 30% have a sell rating.
His price target of $788 is 83.8% above the average analyst target of $428.77, which is 34.0% below Mondayâ€™s close.
Oshaâ€™s more-bullish view on Tesla isnâ€™t just company specific. He now projects total battery electric vehicle (BEV) shipments in 2025 to be 15.7% of global vehicle sales, up from his previous estimate of 14.0%.
He thinks Tesla will capture approximately 45% of the addressable BEV market in 2025, which is actually down from his current estimate of 54%.
â€œGiven the pace at which we are seeing policy evolve, we could imagine revising our BEV industry numbers up further in coming years,â€ Osha wrote.
Teslaâ€™s stock has rocketed 676.7% this year through Monday, while the S&P 500 has gained 14.4%.