In 2022, Wall Street endured a challenging year, with each of the three major U.S. indexes falling into a bear market. To make matters worse, a number of indicators have suggested a growing likelihood of U.S. recession in the not-too-distant future.
Yet no matter what the U.S. economy throws at financial institutions, analysts, and pundits, the collective view on equities remains optimistic on Wall Street. This is reflected by the price targets issued by analysts and pundits, which usually imply upside on the equities they cover.
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Of course, not all Wall Street price targets are equal. For the following three supercharged growth stocks, which find themselves on the leading edge of innovation within their respective industries, the sky is the limit. Based on three Wall Street analysts and pundits, these fast-paced stocks offer scorching upside ranging from 662% to 741%.
Tesla: Implied upside of 729%
Perhaps one of the best-known moonshot price targets issued on Wall Street comes from Cathie Wood, the CEO and CIO of Ark Invest.
In a report issued by Ark Invest in April 2022, Wood and her team forecast that electric-vehicle (EV) manufacturer Tesla (TSLA -1.11%) will hit $4,600 by 2026. Keep in mind that this price target is prior to Tesla conducting a 3-for-1 stock split in August 2022. When adjusted for the split, Wood's $1,533.33 price target equates to 729% upside from where shares of the company closed out last week.
According to the bull and bear outcomes presented in Wood's valuation model, Tesla is expected to achieve between 10 million (bear forecast) and 17 million (bull forecast) EV sales in 2026, and total autonomous ride-hailing revenue ranging from $51 billion in the bear model to $486 billion in the bull outcome.
Tesla has certainly ridden the wave of its first-mover advantages. The company produced and delivered north of 1.3 million EVs in 2022, and production is expected to hit an estimated 1.8 million EVs in 2023, largely thanks to the Berlin, Germany, and Austin, Texas, gigafactories ramping up activity.
The company is also profitable on a recurring basis. While selling renewable energy credits (RECs) to other automakers has helped inflate its earnings per share, RECs aren't necessary for Tesla to be recurrently profitable.
However, warning signs are also mounting for Tesla. The company has reduced prices for all of its EV models multiple times this year. While some people would speculate that more efficient production is the cause for these price declines, rising EV inventory levels would suggest otherwise.
Maybe the bigger problem for Tesla is that many of CEO Elon Musk's innovations fail to become reality. For example, Wood is modeling at least $51 billion in autonomous ride-hail revenue by 2026 in a worst-case scenario. Meanwhile, Musk promised to have 1 million robotaxis on the road more than two years ago. There are still zero.
With Tesla struggling to become more than just a car company, a price-to-earnings ratio of nearly 50 in 2023 could be tough to support.
Bionano Genomics: Implied upside of 662%
You don't need a mega-cap stock to get a sky-high price target. Small-cap genome analysis company Bionano Genomics (BNGO 3.57%) proves this.
In January, Ladenburg Thalmann analyst Jeffrey Cohen reiterated his and his firm's $8 price target on Bionano after the company announced its preliminary fourth-quarter operating results. According to Cohen, additional clinical data should support the company's commercialization and reimbursement efforts for optical genome mapping (OGM) system Saphyr. If Cohen's price target proves accurate, shareholders as of the end of last week would enjoy an eventual gain of 662%.
Bionano's Saphyr system is designed to detect structural genome variations. The idea here is that researchers, such as drug developers and universities, can utilize Saphyr to detect structural variations in hard/difficult-to treat diseases. In doing so, new approaches can be attempted by drugmakers to cure these diseases, or at the very least improve patient care. Bionano Genomics has released a laundry list of case studies where Saphyr has successfully identified genome variations for a number of hard-to-treat diseases and ailments.
Why hasn't Bionano Genomics rocketed to the moon if Saphyr is such a superstar? The simple answer is that Saphyr isn't approved by the U.S. Food and Drug Administration (FDA), and there's no precise timeline as to if or when that'll happen. Without this approval, placing Saphyr systems and getting reimbursed has been dicey.
The other concern for the rapidly growing Bionano Genomics is funding the company's growth. It closed out 2022 with $113.2 million in cash, cash equivalents, and available securities for sale. However, just a day after releasing its full-year results, the company filed a $400 million mixed-shelf offering that would give it more flexibility to raise cash. While this doesn't guarantee Bionano will raise additional capital, it's a pretty good indication that existing shareholders could be diluted, in some capacity, if operating losses continue.
Although Bionano Genomics is a company with intriguing technology, its operating losses would have to shrink considerably if its stock is to make a run at $8.
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Plug Power: Implied upside of 741%
The third supercharged growth stock at least one Wall Street analyst believes can soar over time is hydrogen fuel-cell solutions provider Plug Power (PLUG 1.26%). H.C. Wainwright analyst Amit Dayal has stuck to his call that Plug will eventually reach $78 per share, which translates into upside of 741% from where the stock closed out this past week.
Like Tesla, Plug Power finds itself at the center of a green-energy revolution. Countries and businesses want to reduce their carbon footprints, and hydrogen-powered transportation and industrial equipment looks like one part of the solution. While Plug has targeted $3.3 billion in annual sales by 2025 and $20 billion by 2030, Dayal believes the company will hit $25 billion in annual revenue by 2032. That's a phenomenal growth rate, if accurate, given that Plug generated just $701 million in sales in 2022.
Some of this growth is, obviously, being driven by innovation. Three months ago, Plug opened a fuel-cell manufacturing plant in New York. Likewise, newer generations of its GenDrive units used in industrial forklifts should be cheaper to produce and service.
But make no mistake about it: Partnerships and joint ventures are Plug Power's key to long-term success. It's no coincidence that shares of the company caught fire in early 2021, shortly after Plug had forged joint ventures with South Korea's SK Group and French automaker Renault. The latter joint venture has the duo tackling Europe's light commercial vehicle market, while the former will see Plug become a key player in fuel cell-powered vehicles and green hydrogen infrastructure throughout Asia.
However, great ideas on paper don't always translate into great investments. Though fuel-cell companies are still arguably in their infancy, Plug Power has produced operating losses of $584 million (2020), $437 million (2021), and $680 million (2022) in each of the past three years. It's not yet clear if hydrogen solutions will (pardon the pun) fuel Plug Power to profits.
To add to the above, a recession would be particularly bad news for the money-losing Plug Power. Recessions usually coerce businesses and governments to tighten their belts. More importantly, economic downturns often weigh down the price of oil and natural gas. Lower oil prices could taper demand to switching to greener energy sources.
In other words, Dayal's lofty price target doesn't appear achievable anytime soon.
