Shares of Tesla stock surged 13% to a record high on Monday, extending their rally to over 40% in five sessions after analysts raised their price targets on the electric car maker following its strong quarterly deliveries.
JMP Securities increased its price target to $1,500 from $1,050 after Tesla on Thursday reported higher-than-expected second-quarter vehicle deliveries, defying plummeting sales in the wider auto industry as the coronavirus pandemic slammed the global economy.
"We believe that the question to be considered is not whether the stock is expensive on current valuation measures, but what the company's growth and competitive position signal about the stock's potential for the next several years," JMP Securities analyst Joseph Osha wrote in a client note. Tesla's annual sales could hit $100 billion by 2025, he predicted. (For comparison, Toyota's annual revenue is $275 billion, GM's is $137 billion and Ford's is $156 billion.)
JPMorgan, which rates Tesla "underweight," raised its price target to $295 from $275, while Deutsche Bank upped its target to $1,000 from $900. The median analyst price target for Tesla is $675, compared with its current share price of $1,372, according to Refinitiv.
Tesla's solid delivery numbers heightened expectations of a profitable second quarter, which would mark the first time in Tesla's history that it would report four consecutive quarters of profit.
However, with Tesla's stock up nearly 500% over the past year, many investors believe the rally is unsustainable. The stock is trading at 158 times expected earnings, according to Refinitiv, an exceptionally high valuation.
Following Monday's surge, Tesla's market capitalization stood at $245 billion, growing its lead as the world's most valuable automaker by that measure.