Mizuho gives Tesla a buy rating, says battery program will sustain it as an electric vehicle leader

Published Wed, Mar 10 20215:10 PM EST

Jesse Pound @/in/jesse-pound @jesserpound

Tesla's success in batteries should ensure that it remains a leader in the electric vehicle market and makes its stock a smart buy for investors, investment firm Mizuho said Wednesday. Mizuho began coverage of the volatile electric vehicle stock with a buy rating, saying in a note to clients that the company is well positioned to take advantage of the expected boom in clean energy vehicles and expand into related businesses. "With Tesla's cutting-edge battery technology driving key leadership in the EV market and providing sustainable energy storage for residential & industrial applications, disrupting the global energy market, we see TSLA as a leader for the next decade and beyond," the note said. Mizuho put a price target of $775 per share on the stock, 16% above where shares closed on Wednesday. That is above the average price target from analysts, but well below some of the most bullish outlooks, according to FactSet. The firm praised Tesla's business model, saying that the fact that it produces many of its components in-house and is building new factories should help it drive costs relatively low even as demand and supply expand. "Similar to Apple's vertically integrated model, we believe Tesla's model, with its intense focus on ruthless engineering and end-to-end learning, drives innovation and manufacturing costs lower," the note said. The rise of Tesla has been one of the biggest stories on Wall Street in recent years, and it is now one of the largest companies in the S & P 500 by market cap. However, Tesla's stock has been sliding in recent weeks, and Mizuho's price target is well below the $883 mark that Tesla closed at on Jan. 26. The stock is down 5.3% year to date. Tesla is not the only stock in the electric vehicle space that Mizuho likes. The firm also began coverage of Chinese automaker Nio with a buy rating. Mizuho has a price target of $60 per share on the stock, which is 45% above where Nio closed on Wednesday. --CNBC's Michael Bloom contributed to this report.

Tesla CEO Elon Musk attends an opening ceremony for Tesla China-made Model Y program in Shanghai, east China, Jan. 7, 2020.