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The wide range of methodologies used to value Tesla stock by Wall Street is something to behold. That’s a different sort of risk investors should consider when reading a Wall Street research report—whether price targets are a good guide to stock value. In fact, the Tesla target price example feeds an interesting debate: Do price targets matter at all?

The fundamental debate about Tesla, the company, and its shares is fairly straightforward: Can the company maintain its leadership position manufacturing electric vehicles and will batteries power the majority of new cars in the future? Analysts’ ratings, for the most part, follow their answers to both questions.

The hoops analysts jump through, however, to generate price targets corresponding to the ratings is far from straightforward. And even finding target justifications in research reports can be as difficult as understanding price-target jargon. Target methodologies are explained in the back of research reports. They are a little like interest rate disclosures that come with monthly credit card bills—important, but no one reads them.

To illustrate how Wall Street values Tesla, we present 4 valuation methodologies. (Brokers and analyst names have been scrubbed from the methodology and our commentary.)

No. 1, Enterprise Value to Ebitda

One $350 price target is based on a 17 times multiple of 2022 adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda. The valuation multiple is generated by looking at high-growth companies in nonautomotive industries. And the price from the multiple is discounted back to 2019 at a 20% interest rate.

That’s a lot of steps, but using an Ebitda multiple is typical on Wall Street. What is less obvious is discounting a price target from 2022 to 2019 at 20%. That means the analyst is deciding what to pay today to make 20% a year between 2019 and 2022. That’s a good return, and seems sensible. A high rate of return should be required on riskier stocks.

Enterprise value to Ebitda is similar to a basic price-to-earnings methodology. Ebitda multiples, however, are preferred when a company doesn’t generate bottom-line profit or a company is highly indebted and interest expenses consume a lot of the operating profit.

Of course, another big assumption, one more important than valuation methodology, for investors to evaluate is what Tesla Ebitda will be in 3 years.

No. 2, Discounted Cash Flow

A discounted cash flow projects all of the cash a company may generate into the future and discounts it back using an appropriate interest rate. It is another typical methodology the Street uses to value a stock.

There are many ways to come up with the right discount rate. Example 1 generated a discount rate by, essentially, asking what a fair return was for a risky tech stock. But equity investors should, at minimum, demand a better return than what bonds are yielding. After all, equity holders own all the cash of a company after bondholders get paid. (Tesla’s bonds yield about 8% today.)

This analyst is using discounted cash flow—the math behind it isn’t detailed in th research report—to set a price target of $230. He values Tesla’s car business at $185 a share and a new business known as Tesla Mobility, based on Tesla’s proprietary autonomous-driving technologies, at $45. But there more going on at Tesla to which he assigns no value.

Tesla owns nonautomotive assets such as Solar City, purchased in 2016, has a battery-storage business and a charging network. Assigning no value to solar panels or energy storage is a little surprising. What’s more, Tesla Mobility has no revenue and, according to the analyst, a value of $8 billion.

No. 3, Sum of the Parts

Sum of the parts is a method that looks at each division or asset separately. Analysts favor this for conglomerates or when one division is losing money or when a division could be sold to a third party.

This analyst values Tesla stock at $210, which is derived by valuing the car business at $190 a share, battery storage at $16 a share and the solar panel business $4 a share.

Unlike example 2, this doesn’t look at the new Mobility opportunity, but values the combined solar and batter businesses at $20 a share. So, if you were to combine both efforts you could justify paying $250 for Tesla stock.

No. 4, Probability Weighting

Clearly there is a lot going on at Tesla, meaning a lot could change in the future. And one way to account for the uncertainty is to assign a probability to a few predicted outcomes, then add them together to get a probability-weighted price target.

One $225 price target assumes 3 possible outcomes for Tesla electric-car sales in the future—a bull case, a bear case and base case. The scenarios are weighted at 20%, 20% and 60% respectively.

That is sensible, but how the target price for each scenario is derived is opaque. According to the report, price targets are based on enterprise value to Ebitda multiples for tech—not automotive—companies.

These are our four examples. If you are confused or frustrated, all you really need to know is that no one has invented a definitive system for valuing stocks. The logic used in the 19th century isn’t too far removed from what’s considered fair in the 21st century. Basic price-to-earnings or enterprise value-to-Ebitda multiples work fine. What’s more, investors should realize that the more controversial the stock the stranger the valuation justifications can get.

Telsa is, and will continue to be, a controversial stock. It has 12 Buy ratings and 15 Sell ratings among large brokerage firms, according to Bloomberg. What’s more, Tesla is unusual because it is covered by both renewable-technology analysts and automotive analysts—and Barron’s sees a trend in which the car analysts generally don’t like the stock and the tech analysts do.

Analyst price targets on Tesla stock range from $140 to $530, a spread of $390, or almost 180% of the current stock price. The average bull-bear spread for stocks in the Dow Jones Industrial Average is about 40%. Even if analyst price targets do matter, in the case of Tesla, they certainly aren’t helpful.

Write to Al Root at allen.root@dowjones.com