Tesla (TSLA) PT Raised to $450 at Baird but Regulatory Credits Remain a Swing Factor

October 15, 2020 7:25 AM EDT
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Price: $589.72 +3.15%

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    21 Buy, 21 Hold, 11 Sell

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Baird analyst Ben Kallo raised the price target on Tesla (NASDAQ: TSLA) to $450.00 (from $360.00) while maintaining a Neutral rating seeing potential upside from strong volumes and credit revenue but potential risks from ongoing production ramps. The model update is the result of updating estimates to reflect Q3 delivery numbers.

The analyst stated "Regulatory credits a significant swing factor, and we think guidance may be conservative. TSLA guided to credit revenue roughly doubling y/y, implying ~ $1.2B of revenue for 2020. Based on 1H:20 credit revenue of $782M, this implies ~$200M of revenue quarterly, a decline of 53% sequentially in Q3 (assuming linear distribution). While there is admittedly not a significant amount of visibility on timing of credit sales, we do think the guidance could be somewhat conservative". He went on to state "Notably, we think recent share appreciation may incentivize increased investment in growth, rather than the focus on cost controls which have characterized TSLA’s past several quarters".

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Robert W Baird, Tesla, Ben Kallo