Stifel Likes Tesla, But Warns Of Few Catalysts To Turn Bears Bullish

• Tesla Motors Inc TSLA shares have plummeted 35 percent since January 4, and are trading near their 52-week low of $156.
• Stifel’s James Albertine maintained a Buy rating for the company, with a price target of $325.
• The company’s long-term strategy far outweighs short-term headwinds, Albertine stated.

Analyst James Albertine mentioned that Tesla continues to be a good long-term investment. The company is one of the few automotive manufactures building vehicles to a backlog of demand, while most OEMs follow a motto “build it and they (customers) will follow.”

Tesla is one of the most innovative OEMs with an ability to quickly transform ideas into production with the help of its over-the-air, or OTA, updates to existing vehicle owners.

“TSLA has cornered the market for lithium-ion battery cells, currently purchasing roughly 25% of the global supply. We expect the Gigafactory can drive battery production costs even lower to put further distance between TSLA and peers,” Albertine wrote.

The analyst pointed out that while the high level of in-sourcing in Tesla’s vehicles requires tremendous investment, it helps streamline production and improve product quality. The company’s focus on the market opportunity for electric vehicles is the key “underlying driver of its success to date” and its speed to market new innovations is “worth a premium valuation to traditional OEMs.”

“However, we see few catalysts to turn short-term bears bullish; seems to be the case every 1Q,” the Stifel report noted. The EPS estimate for 4Q15 has been reduced from $0.12 to ($0.04).