Analyst on Tesla: 'It's your standard bipolar debate dripping with pessimism'

Elon musk 2008APTesla CEO Elon Musk.

Here’s a provocative title from an analyst note, via Pacific Crest’s latest on Tesla: “It’s Your Standard Bipolar Debate Dripping with Pessimism”

For the record, Pacific Crest is in the bull camp on Tesla, maintaining an Outperform rating and $US293 price target on shares (though this is down from a prior target of $US300). On Friday, Tesla shares closed at $US198.

Here’s the overview of the firm’s bull case on Tesla:

While we are tempering our expectations slightly on FX and Model X gross margins, an on-time Model X, a Model 3 announcement and Gigafactory updates could all send shares meaningfully higher. We think the time to own TSLA is now.

Right now, Tesla sells just the Model S sedan, but is expected to debut the Model X SUV later this year and in time announce the Model 3, a lower-cost model. The Model X has faced delays and the Model 3 isn’t expected until 2017.

Pacific Crest is bullish on prospects for the Model 3 boosting sales as the firm writes: “Having talked with over a dozen Model S owners in the past year, we’d note a couple of key takeaways commonly heard: (1) you’d be hard pressed to find any product more adored by its owners and (2) the vast majority (like two-thirds to three-quarters) are emphatic that they’d buy another when a lower-priced model is released.”

And so basically the firm is saying that if you’ve bought one Tesla, you’ll probably buy another.

The firm also breaks down the bear and bull camps — or those that think Tesla shares are worth less or worth more than they currently are — as follows:

Bears cling to the notion that demand is not sustainable, China may never happen and execution issues that have plagued the company recently will persist. Bulls believe the recent near-term hiccups are just noise and longer- term opportunity should be the focus. We wouldn’t disagree. We think Tesla has established an extremely difficult-to-achieve foothold at the high end from which it can continue building momentum with future product cycles, provided there is reasonably solid execution. We remain buyers of the stock.

Earlier this month, Business Insider’s Matt DeBord looked at some of the assumptions folks in the analyst community are making regarding the Model 3.

But over the last year, Tesla has become the kind of battleground stock that has evangelical believers and doubters and almost no neutral parties.

Or, as PacCrest calls it, a “standard bipolar debate,” whatever that might be.

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