Analyst Patrick Hummel kept his rating at neutral, but boosted his price target to $730 from $325
A long-time skeptic on Tesla Inc. 's stock, UBS analyst Patrick Hummel, has more than doubled his stock price target, saying the narrative is no longer about the company's leadership in electric vehicles, it's about "winning" in software.
Hummel raised his price target to $730 from $325, while keeping his rating at neutral. His new target has swung to be 20% above the average target of the 34 analysts surveyed by FactSet -- $608.58 -- from being 46% below it.
He has been neutral on Tesla since March 2020, after being at sell or not rated since at least December 2017.
Tesla's stock (TSLA) edged up 0.2% in premarket trading. At Tuesday's closing price of $686.44, the stock was down 28.6% since closing at a record $883.09 on Jan. 26.
Hummel said that while legacy vehicle makers who are now "all-in" on electric vehicles can challenge Tesla's EV volume leadership, Tesla remains the undisputed technology leader in the space, most notably in software.
"This is the next battleground and main driver of valuation from here, in our view," Hummel wrote in a note to clients.
He said becoming one of the largest and most profitable original equipment manufacturers (OEMs) by 2030 is worth about $200 billion in market value for Tesla, in his base case analysis. That leaves more than $400 billion in market value for everything else, he said. Tesla's market capitalization as of Tuesday's close was $658.9 billion.
"We think the lion's share of this value can be generated by software, mainly autonomous driving," Hummel wrote. "With that, Tesla has the potential to become one of the most valuable software companies."
Tesla's stock has soared 360.4% over past 12 months, while legacy OEM General Motors Co. shares (GM) have rallied 77.3% and the S&P 500 index has advanced 28.9%.
-Tomi Kilgore; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
March 03, 2021 09:14 ET (14:14 GMT)
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