Tesla Inc (NASDAQ:TSLA) stock is trading up marginally as analyst at Wells Fargo initiated coverage on the stock with an Equal Weight rating.
Tesla: When it’s good it’s good, when it’s bad it’s better; initiate at Equal Weight — Wells Fargo (580.88)
Analyst Colin Langan offered, “We are initiating on TSLA with an EW and $590 price target. Even after recent price declines, we estimate the stock is pricing in >12m units in 10 years, larger than any global automaker today. We expect deliveries to continue to surprise to the upside near term, which gives support to TSLA bulls. We see three notable concerns.
One, once Model 3/Y capacity comes fully online in ~2022, we are cautious that there will not be enough demand for the ~1.7m in capacity available for these products as it would imply new record luxury sedan & SUV volumes. Recent negative headlines in China add to this concern. Two, EV battery raw materials cost have spiked >50% likely adding ~$25/kWh or ~$1,375 per vehicle once contracts reset. Three, there is US regulatory risk around Autopilot, the failure to add driver monitoring heightens the risk of US regulators mandating changes. In a worst case, TSLA could be forced to disable the system. Our price target is based on a DCF.”
TSLA stock is up 0.41% at $583.25.