Even though Tesla Motors Inc. (NASDAQ:TSLA) shares largely disappointed investors in 2016 by ending the year pretty much flat versus the beginning, at least one analyst is quite bullish about 2017.
Ben Kallo (and his team) from Baird selected Tesla as their top stock pick of 2017 for a number of different reasons.
Kallo thinks the overhang from the Solarcity acquisition will go away in 2017, which is something that impacted the stock last year. By now, all of the investors who were opposed to the deal have been flushed out.
There are also reasons to be bullish about the deal itself. Combining Tesla’s battery expertise with Solarcity’s large customer base could be beneficial to each division.
Tesla also suffered from other short-term issues in 2016, like the U.S. election. Kallo thinks these overhangs will lift in 2017, helping shares head higher. Shares did rally after Donald Trump was elected in November.
Remember, Teslas are built in the United States, much to the delight of the president-elect. Other car manufacturers are facing Trump’s wrath as they try to move production to cheaper locations.
Tesla also plans to really up production in 2017, targets Kallo thinks are achievable. The company is increasing production capacity from 500,000 units per year to one million and is expanding its Reno, Nevada factor to more than 12 million square feet as it prepares to start producing Model 3s.
Tesla shares reacted positively to this news, rising $5.17 each, or 2.25%, in Friday’s trading.
