The shares of Tesla Motors Inc. dropped 14.3 percent on July 16, 2013 following a move by Goldman Sachs Group Inc. setting a new price target below the current trading price. In a broader research note on the automotive sector, Goldman Sachs analyst Patrick Archambault offered three different growth scenarios for Tesla and set a six-month price target of $84 per share.
He left unchanged his "neutral" rating on the stock. Tesla’s shares dropped by $18.21 to close at $109.05 on Nasdaq. Tesla’s shares had nearly quadrupled so far in 2013 until Monday. In one scenario, Archambault sees Tesla selling 105,000 cars -- including the Model S and a future smaller sedan -- with 14.6 percent operating margins and earnings per share of $5.99.
In the second scenario, he sees the carmaker selling 150,000 cars with 14.8 percent margins and earnings per share of $8.59. In the third scenario, Archambault sees Tesla selling 200,000 units with 15.2 percent margins and earnings per share of $11.69.
Archambault came up with the new price target of $84 by averaging out the three scenarios. Archambault said automotive stocks have underperformed the S&P 500 index by an average of 26 percent in three of the last four economic periods.
According to him, the auto sector has historically reached a peak of 65 percent of the way through an expansion. Archambault remarked he was now focused on General Motors Co. and Ford Motor Co, which he said has “strong product-driven growth stories in multiple regions."