Goldman Sachs is turning bullish on Tesla Inc's TSLA stock on increased electric vehicle adoption and battery prices falling quicker than expected.
The Tesla Analyst: Goldman Sachs analyst Mark Delaney upgraded Tesla from Neutral to Buy and raised the price target from $455 to $780.
The Tesla Thesis: If Tesla maintains its share of the EV market in the mid-to-high 20% range, it could reach 15 million units by 2040, or 20 million in case of an upside scenario, Delaney theorized, as reported by CNBC Wednesday.
The analysts at Goldman Sachs said in the note that if the industry continues its shift towards EVs at a quicker pace than they anticipate or if the Elon Musk-led company is able to take a share in the market then they believe that Tesla would reach the forecasted volumes more quickly.
Tesla stock has risen nearly 580% on a year-to-date basis.
Delaney also noted that the EV cost disparities with gasoline-powered cars and trucks, as reported by Bloomberg. “Battery prices are falling faster than we previously expected, which improves the economics of EV ownership.”
Why It Matters: Goldman Sachs' current price target is reportedly the highest among the major analysts, noted CNBC.
The bank had downgraded Tesla stock in June, citing concerns regarding demand and production in the second half of 2020 but said Wednesday that it had been “incorrect.”
Recently, Goldman Sachs analyst Fei Fang raised price targets on Tesla’s Chinese rivals Li Auto Inc. LI and Nio Inc. NIO, citing the growing share of EVs in the Chinese auto market.
Last month, CNBC host Jim Cramer acknowledged that he was wrong about Tesla being a “cult stock,” — adding “they have left the old-school automakers in the dust.”
Price Action: Tesla shares closed nearly 2.7% lower at $568.82 on Wednesday and gained 2.48% in the after-hours session to $582.93.
Related Link: Tesla's Stock Will Be Added To S&P 500 All At Once
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