Cybertruck is the Key to Tesla Stock's 'Buy' Calls

Since Tesla's debut with public investors in 2010, it has been a controversial company, as well as a controversial stock, as it has brought controversy to the entire industry. Given the iconoclastic nature of its CEO, Elon Musk, as well as the fact that its technology was designed to disrupt an industry that has been around for over a century, it was probably inevitable.

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While Tesla (ticker: TSLA) is still subject to a great deal of debate, the stock has quietly become one of the most popular stocks on Wall Street, and it is only getting more popular.

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As part of his coverage of the automotive sector, Barclays analyst Dan Levy launched a blog post on Tuesday evening. Currently, he has rated Tesla shares as a Buy and has set a target price of $275 for the shares. Rivian Automotive (RIVN) shares are also rated at Buy, with a target price of $28 set for the stock price of Rivian Automotive (RIVN).

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The only two automakers he rates as Buys are those two. The EV startup Fisker (FSR), as well as Ford Motor (F), are also on Hold and General Motors (GM) is on Sell.

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As Levy points out, Tesla has strong financials and is at the forefront of the electric vehicle market, which represents a larger portion of the global auto market compared to gasoline vehicles. In the meantime, "recessionary pressures", such as lower car prices, which have impacted the profitability of GM and Ford, have kept him on the sidelines.

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“While Rivian still faces a number of challenges in ramping up its production efficiency, achieving positive margins, and generating positive cash flow, we believe that [it] is well positioned to take a significant share of the rapidly growing North American electric vehicle market,” Levy wrote.

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There is no doubt that Fisker has a good product in the Ocean SUV, but it is likely that more capital will eventually be required.

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In his last role with Credit Suisse, Levy rated Tesla stock as a Buy when he was at that firm until the end of last year. Despite the fact that Credit Suisse doesn't cover Tesla stock at the moment, he has just given the stock a new Buy rating, bringing that number to 31 from 30, according to FactSet. The number of Buys for Tesla stock is a record number for the company.

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As Tesla prepares to roll out its Cybertruck in 2023, Wall Street is driven by another reason to increase its stake in the company. An analyst with Truist conducted a survey and found that the odd-shaped vehicle is likely to be a big hit, according to William Stein.

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It has stirred controversy ever since Tesla first displayed the Cybertruck in 2019 because of its unusual angular design, wrote Stein in a blog post on Wednesday. Considering that most investors that he spoke with expected the truck to be a flop, he surveyed 504 customers and found that 6% of pickup truck buyers are considering an all-electric power train as part of their purchase decision. Furthermore, 3% of the respondents said they intended to purchase a Cybertruck in the near future.

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As a result of these statistics, Cybertruck could capture up to 50% of the growing electric-truck segment within the next few years. "It appears that implied interest in the Cybertruck appears to be much stronger than the bearish view," the analyst concluded. It should be noted that Ford and Rivian together sold about 33,000 electric trucks in 2022, so this gives you some context.

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Currently, Stein rates shares of the company as a Buy with an average price target of $245.

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Approximately 66% of analysts rate shares of the company as a Buy. That is almost a record as well. This figure came to 67% in 2012, but that included only 10 Buy ratings at that time, which is not surprising, given that Tesla at that time was much smaller than it is now. Approximately 58% of the stocks in the S&P 500SPX –0.42% have a Buy rating, which is the average ratio for stocks in that index

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It has been estimated that the average target price for the stock price is between $209 and $209 per share, with a difference of more than $300 between the high and low calls. There is still some controversy about Tesla on Wall Street although the spread between the current stock price and its future price is approximately 150%, compared to these spreads of 125% and 50% for General Motors and Apple AAPL +0.58% (AAPL).

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A new Buy rating from an old fan appeared to help Tesla stock in premarket trading, giving it a gain of almost 2%, but by midday, the shares had slipped back to $208.50, resulting in a loss of 0.4%. By comparison, the S&P 500 and Dow Jones Industrial Average were both down 0.6%.