Tesla Motors Inc (NASDAQ:TSLA) maybe more lauded in media lime lights for its core electric vehicles business, but a Wall Street investment firm believes it’s the recent stationary energy storage initiatives of Tesla that could be the stand out for the company a few years from now.
Investment firm Oppenheimer believes the energy storage space may still be a couple of years from really taking off, but the firm has identified three companies it believes could be at the center of that disruption: Johnson Controls, Ideal Power and Tesla Motors.
Shares for Tesla are trading down 0.3% in early trading. Johnson Controls stock is down 0.4% while Ideal Power stock is up 3%.
Lead analyst Colin Rusch said stationary storage applications like Tesla’s Powerwall and the Powerpack comprise the most potential to disrupt the power space and dethrone the status quo. The firm believes companies like Tesla could drastically change the relationship between utilities and consumers as well as advance the world’s efforts to adopt renewable energy sources.
Tesla has already touted grouping its Powerwall and Powerpack solutions with solar panels from sister company SolarCity Corp for a more all-round energy solution.
Johnson Controls, which Oppenheimer has an Outperform rating for and a $48 price target, is dubbed as an established name in the energy storage space by the firm. Mr. Rusch said the company’s Power Solutions segment could garner double-digit percentage growth in EBIT for the company as it doubled the production of high-capacity absorbed glass batteries. An added advantage to the company is its already expanding clientele of one million buildings across the globe.
For Tesla, Oppenheimer makes the case that the company leads expertise in cell design, software and packaging a complete energy solution. The firm believes Tesla will continue to lead innovation in the energy storage space. Given the company’s projections of strong operating leverage this year and positive free cash flows by next year, Oppenheimer believes it will be poised as a strongly disruptive player alongside the already established players.
For Ideal Power, Oppenheimer believes the company to be an intellectual property player in power management and energy storage fields. Backed by a strong portfolio of leading micro grid and energy storage products, the firm believes the company is poised for strong increments in revenue and profit over the coming five to seven years.