Shares of Tesla increased this week, rising almost 4% at the start of the week. The gain came after a top analyst gave the company a large price increase. Jed Dorsheimer, from Canaccord Genuity now believes the car maker could increase to $1,071 within the next year.
After the stock reached an all-time high of right over $900, it went sharply down in February and the start of March. Has this pullback given us a buying opportunity?
The next marker
Dorsheimer increased his Tesla price marker from $419 to $1,071. The analyst also changed his rating from hold to buy.
While Tesla makes use its revenue from cars, the analyst’s stock upgrade has to do with his prediction for the company’s energy storage sector.
He sees Tesla’s energy business bringing in $8 billion annually by 2025 thanks to an “Apple-like energy product ecosystem” and “harmonized electrification.”
Dorsheimer believes that as the company solves its battery cell shortage, they will be well positioned to expand the business through its energy product sales. He also sees Tesla being several years ahead of its competition in energy storage technology, giving it an edge.
Though Tesla’s car sales get more press, energy storage actually expanded faster in 2020 than car sales. Total energy deployments expanded by 83% in 2020.
“This increase was founded mainly by the Megapack product, our utility scale product., Tesla told investors during its Q4 update. “Powerwall demand is increasing as residential businesses continue to expand.”
Impressively, this came as production was limited. “Our energy business is supply constrained and our backlog is strong., Tesla said. But its push to increase production will help the firm boost supply “in the next three months.” Because of this, the car maker expects its energy business to increase at around the same growth rate in 2021 as it experienced in 2020.
While investors should do their own home work on Tesla, Dorsheimer’s upgrade does put focus on a very underappreciated part of its business.