Tesla Shares: To Buy Or Not To Buy; Target Prices Are All Over The Place

A share of Tesla Motors Inc. (NASDAQ:TSLA) is almost $24 cheaper this week than it was Friday after Morgan Stanley’s lead auto industry analyst echoed Tesla CEO Elon Musk in saying the stock is overvalued. Shares plunged 9 percent Monday, but investors appear to be bargain hunting, and the price appears to be rebounding.

Some Wall Street analysts think shares have farther to climb.

"Tesla fundamentals are intact and strong,” Global Equities Research’s Trip Chowdhry said in a note released Tuesday morning. He said the current $256 share price will rise to $385 within 12 months to 18 months. Analysts’ estimates are volatile, however, suggesting a lack of consensus about where the company that hasn’t ever made a profit should be priced.

Chowdhry's remarks came a day after Morgan Stanley’s Adam Jonas, whose comments have moved Tesla’s stock, removed his $320 target price, warning that after a strong run in August the price was moving too aggressively.

Like Chowdhry, Stifel Nicolaus analysts recently upped their target price to $400, while Credit Suisse currently maintains a target price of $325.

Chowdhry defends his analysis in light of expected developments from the Palo Alto, California, maker of the game-changing Model S luxury electric car and upcoming Model X electric utility vehicle.

* Tesla is expected to unveil an all-wheel-drive Model S and a driver’s assistance system – presumably some form of crash avoidance – by yearend. The all-wheel drive option would make the car more appealing in snowy conditions.

* Tesla is expected also to release a 400-mile range pack for its older Tesla Roadster that could be a test run for future range extension. The Model S has a range of up to 265 miles per charge. Tesla is the only maker of a mass-marketed, all-electric luxury vehicle, and it produces the only electric car with a range topping 100 miles per charge (mpc) under U.S. Environmental Protection Agency standards. Toyota’s RAV4 EV, which uses Tesla’s electric drivetrain technology, gets 108 mpc but is being discontinued due to lack of demand.

* Tesla's sub-$40,000 Model 3 could be displayed to the public by this time next year.

Musk said last week during his appearance in Carson City, Nevada, announcing his company picked a site east of Reno for its $5 billion battery factory that Tesla’s share price is “quite high.” This is the third time Musk has warned that Tesla shares are overheated since August 2013 when the share price was hovering around $160 a share.

Shares rose more than 1 percent in afternoon trading Tuesday. The stock is down a little more than 2 percent for the month but up more than 14 percent for the past three months. For the year, the stock is up about 70 percent.