Analyst: We Don't Like Tesla, But Here's Why We Could Be Wrong

Barclays has been a notable bear on Tesla Inc TSLA for some time.

Tesla has been one of the most speculative companies in current memory, and it has been quite difficult to place a value on the company given the enthusiasm surrounding the disruptive industries it is leading.

Barclays analyst Brian A. Johnson knows this, but gives it a shot anyway.

“The market clearly disagrees with our conservative valuation of Tesla, and we are still refining our ‘Return on tweet’ analysis as the ultimate valuation tool,” said Johnson

Johnson has been big on using Matrix references when referring to Tesla in his analysis.

“Yet to understand our disconnect with the market, we re-examine our scenario-based valuation approach. What’s clear is that the largest driver of Tesla valuation is hopes of dream/’blue pill’ scenarios,” he added.

Barclays raised its price target on Tesla to $210 up from $165 but maintains an Underweight rating.

According to Johnson, it is the dream behind Tesla that drives the stock. It would not be a stretch to see Tesla as a $600 stock. Even if short-term issues do appear, the optimism is too high surrounding the company to see near-term issues mattering.

In the analyst’s most realistic approach, shares would be valued at $145.

“It assumes in 5 years Tesla will have 840k units of volume, while applying a solid 25X PE multiple and discounting back. That’s solid growth!”

Related Link: Deutsche Bank: The Street Is Lowballing Tesla's Electric Truck