CFRA Increases Tesla Price Forecast to $USD 420 a Share | Financial Buzz

CFRA Increases Tesla Price Forecast to USD 420 a Share

The Center for Financial Research & Analysis LLC (CFRA) has increased its price forecast for Tesla Inc (NASDAQ: TSLA) from USD 420 a share, matching the price target the company’s CEO Elon Musk has indicated in a tweet earlier this year.

In addition to production concerns, Tesla investors have also been worried about competition. The electric car market is becoming more crowded, and in the comping years new fully electric models by major brands are expected to hit the market. The CFRA analysis indicates however, that Tesla’s lower priced Model 3 versions will help the innovative car maker to brush off the competition.   

In a report by Bloomberg analyst Garrett Nelson of CFRA explained, “While TSLA will face increased competition in the electric-car space in 2019, we see limited impact on sales, as TSLA’s brand strength and the gradual introduction of lower-priced Model 3’s undercuts competitors.”

Other economic concerns such as the U.S’s trade war with China, are also addressed in the CFRA report. According to Marketwatch, analyst Garrett Nelson of CFRA said in a note that, “We expect unit costs to continue to fall, reflecting improved operating efficiencies and fixed cost absorption… We also view the U.S.-China ‘tariff truce’ as having positive gross margin implications.” 

Optimism about the company’s ability to deliver high production volumes has increased, after Tesla has posted its largest profit ever in the 3rd quarter of this year. Bloomberg reported that Elon Musk sent an email to Tesla employees outlining top priorities that include stabilizing Model 3 production at 7,000 cars a week and working to improve costs so the company can build and sell the USD 35,000 version.