Analyst says Tesla stock has room to rise 68% as struggling EV maker’s ‘best company in a distressed area’

• CFRA analyst Garrett Nelson has a $275 price target for Tesla, implying a 68% upside from current levels.

• He told Fox Business that the company is well-positioned to benefit from the electric vehicle industry’s woes.

• Other companies are also hurting the EV maker’s reputation, with Wells Fargo recently downgrading the company.

Garrett Nelson, vice chairman of CFRA, told FOX Business that Tesla’s 2024 drop in stock price is just an overcorrection and that the price will eventually recover to $275. This forecast implies a 68% rise from Friday’s closing price.

The company’s stock has fallen more than 35% since the beginning of the year, but the pullback makes sense given the stock’s doubling in 2023, he said Friday.

And looking to the future, he said there are a number of catalysts poised to accelerate the recovery. The biggest factor is the electric car industry’s woes, and Tesla should once again be the star.

“Looking at North America and Europe, we see Tesla as the best company in a distressed part of the Western market,” Nelson said.

While major U.S. automakers are abandoning EV growth plans in favor of hybrid alternatives, small businesses are facing a more existential dilemma. Just this week, he noted, one of the startups, Fisker, was preparing to file for bankruptcy.

Auto sales have been depressed across the industry, a trend that has weighed on Tesla’s profits and forced it to cut prices on its models.

But at the same time, Nelson said the company is well-positioned to withstand any sector tensions and can grow its market share in the coming years as competition increases.

“They plan to increase annual sales to about 20 million vehicles, which would make them a long way from becoming the largest automaker, surpassing the leader Toyota,” he said, before adding: Even if they fall far short of that goal, we think they still have a ways to go to become the largest automaker.”

Other positives include the company’s $29 billion in cash, a new factory lineup and plans for new electric models this year, Nelson said. But he acknowledged that China could pose a problem given the growing competition with China.

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Nelson’s position is at odds with others who have become dissatisfied with EV makers. Wells Fargo this week called the company a “growth company with no growth” and lowered its price target to $125.

Meanwhile, people like investor Ross Gerber have criticized CEO Elon Musk, arguing that his actions on social media are insufficient advertising for Tesla. .

Read the original article on Business Insider