Tesla Motors Inc. (NASDAQ:TSLA) Flying High With a Price Target of $320

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By Mark Michaels on August 7, 2014 Consumer Staples

On August 6, 2014, Stocks of Tesla Motors Inc. (NASDAQ:TSLA) jumped up by 4.4 percent when Pacific Crest Securities, one of the leading market equity and research firms, updated the company’s price target. However, the increase in the target price was not the only reason as to why the company’s stocks moved up; Morgan Stanley, in a research note recently released, also showed enthusiasm for the company’s upcoming Model X.

The company’s stocks were up by 4.4 percent due to a boost of sell-side estimates and expectations. Tesla Motors Inc. (NASDAQ:TSLA) was facing a trademark infringement issue in the country of China. However, that dispute has been resolved now; one of the reasons why Pacific Crest Securities increased the target price of the company’s stocks to $320. Estimates are that the new price target can cause the stocks to increase by 27 percent, especially when the Morgan Stanley is so confident about the Model X SUV of the company.

Coming to the ratings of Tesla Motors Inc. (NASDAQ:TSLA), Pacific Crest Securities gave the company’s stocks a rating of ‘Outperform’. The research firm further said the company’s stocks can move even higher if the company successfully increases its production rate.

Elon Musk, the chief executive of Tesla Motors Inc. (NASDAQ:TSLA), during the company’s recent earnings release, said that the company was facing some supply issues, which in turn were keeping the pace of the company slow in the marketing sector. He further commented that the SUV’s deliveries were low in the recent past for the company was not receiving enough lithium ion batteries. It is important to note here that the company uses lithium batteries in its cars.

Despite a strained supply of batteries, Tesla Motors Inc. (NASDAQ:TSLA) still managed to stay in the game by exceeding the delivery and production estimates. The company, during its second fiscal quarter of the year 2014, delivered a total of 7,579 cars, surpassing the estimates of 7,500. The company produced a total of 8,763 units during the quarter, which were in line with the predictions. As for the third fiscal quarter, the company expects the shipments to reach around 7,800 cars with a production of 9,000 units.

Coming to Model X of Tesla, the company is set to launch the new model in the first half of next year. Adam Jonas, an analyst at Morgan Stanley, in a research note, said that the company’s new model is expected to seize all the major awards, including the ‘Car of the Year’ award. He further commented that Model X will gain even more popularity than the previous model of the company, Model S.

Estimates are that the new model will contribute to around 50 percent of the company’s annual deliveries of 100,000 vehicles, by the end of next year. Morgan Stanley has given the stocks a rating of ‘Outperform’ with a price target of $320, which points to a 29 percent potential increase in the company’s stocks.

The company has a total of 6 ‘buy’ ratings on its stocks, together with other 8 ‘hold’ ratings. The company has recently made a deal with Panasonic Corporation for the supply of batteries to its Gigafactory. Hence, chances are that the company’s stocks will fly even higher in the near future.