German broker Berenberg went electric today, plugging into US electric cars maker Tesla Inc (NASDAQ:TSLA) by upgrading its rating for the stock and more than doubling its share price target.
Berenberg raised its recommendation for the Nasdaq-listed stock to ‘buy’ from ‘hold’ and hiked its target price to US$464 from US$193.
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In early New York trading, Tesla shares were 3.2% higher at US$370.60.
In a note to clients, the broker’s analysts said, in their view: “The threat from traditional OEMs (original equipment manufacturers) is overestimated and less realistic than perceived.“
They added: “Beyond ‘skeleton’ strategies and unsubstantial announcements, underlying progress towards dedicated, mass-market electric vehicles (EVs) by traditional OEMs will remain uncompetitive as long as they remain bound to the same low-risk, low-cost approach that has been in place for the past 20 years.”
The analysts said: “Tesla’s competitive advantage in the product itself, the manufacturing process and footprint will likely allow it to gain unencumbered market share for a longer period than expected, helping to elevate long-term profitability beyond the premium OEMs.”
They concluded: “Tesla’s disruptive potential encompasses the vehicle, the entire production process and the product-to-market strategy.
“Once the business reaches scale, the cash generation potential is significantly superior to existing premium OEMs, with cash flow per vehicle more than 50% higher.“
Tesla shares added an impressive 3.79% to $372.62 in New York on Tuesday.
$TSLA Berenberg rates Buy with pt 464. Zooom #model3 #tesla pic.twitter.com/qP7LmzH9Qr
— Navi Avatar (@NaviAvatar1) June 13, 2017