Tesla’s (TSLA) latest quarterly results, which include a fifth straight quarter of GAAP profitability, have prompted Street price target increases and renewed speculation over an eventual inclusion in the S&P 500 (^GSPC).
“We think at this point, the S&P 500 index committee is hard pressed to not add the stock to the index, which is the near-term catalyst, and one of the main reasons why we've reiterated our Buy rating and raised our price target by $50 to $550,” Garrett Nelson, analyst at CFRA, told Yahoo Finance’s the First Trade.
With the presidential election around the corner, Nelson points to another possible upside — the implications of a Biden win for the electric vehicle maker.
“In our view, Tesla would be one of the biggest winners as an electric vehicle pure play, because EVs would be very heavily subsidized under a Biden administration,” said Nelson.
“If you look at what [Biden’s] proposing — a massive expansion of tax credits and also a huge build-out of EV charging stations,” said Nelson. “So you're looking at about a 20-fold increase in the number of EV charging stations, which would really help the electric vehicles in the adoption.”
Nelson says the Tesla’s pipeline of upcoming vehicles looks very strong in the coming years, including the Cybertruck, which is scheduled to go into production next year.
“The pickup truck segment is so strong in the United States that we think it will have some appeal beyond the niche product. The sales, I think, will surprise to the upside,” said Nelson.
The analyst also noted the company’s increased production capacity.
“Tesla very quietly increased their annual production capacity, from 690,000 vehicles a year to 840,000 vehicles a year versus three months earlier. So that's a 22% increase in their production capacity between the Fremont factory in California, and the China factory. So it’s a big increase,” said Nelson.
Tesla reaffirmed its goal to hit a half-million vehicle deliveries this year. The stock was trading up more than 2% during Thursday’s afternoon session.
Ines covers the U.S. stock market. Follow her on Twitter at @ines_ferre