Tesla (TSLA) Stock Worth $113 in Best Scenario, $58 in Worst - Goldman Sachs

July 16, 2013 8:26 AM EDT
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Price: $237.75 --0%

Rating Summary:
    16 Buy, 14 Hold, 9 Sell

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In a best scenario, analyst Patrick Archambault of Goldman Sachs thinks Tesla (Nasdaq: TSLA) stock is worth $120. In the worst scenario, he thinks the stock is only worth $58.

"We now value Tesla by taking the average of 3 scenarios. In the first scenario, we assume total sales of 105K (Model S: 50K units, Next Gen: 55K) and operating margins of 14.6% implying an EPS of $5.99. Layering on a 20x multiple given the growth prospects implies a value of $120 which discounted at 20% implies a stock price of $58," said Archambault.

"We then look at a bull case where we assume that TSLA will be able to get approximately 3.5% global market share in the entry lux and mid-lux category suggesting total volumes of 200K units. The 3.5% market share assumption is consistent with the typical 3-5 year share gains seen by the most successful industry players across multiple luxury sub-segments over the past decade. We assume an operating margin of 15.2% in this scenario, which is slightly better than the 15% guidance that TSLA has provided as we see TSLA benefitting from better operating leverage given higher volumes. The implied stock price in this scenario comes at $113," added Archambault.

Finally, Archambaul looked at the mid-case scenario.

"In a mid-case where we assume volumes of 150K units and operating margins of 14.8% which is broadly the mid-point of the two scenarios. The implied price in this scenario is $83. Finally, we take the average of these three scenarios to get our target price of $84," he concluded.

Goldman Sachs has a Neutral rating on Tesla Motors (NASDAQ: TSLA) with modified price target to $84.00 (from $61.00).

For an analyst ratings summary and ratings history on Tesla Motors click here. For more ratings news on Tesla Motors click here.

Shares of Tesla Motors closed at $127.26 yesterday.

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