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Tesla will leap 12% from current levels as pent-up demand drives Chinese market domination, Wedbush says


FILE PHOTO: Tesla China-made Model 3 vehicles are seen during a delivery event at its factory in Shanghai, China January 7, 2020. REUTERS/Aly Song

Wedbush analyst Dan Ives increased his price target for Tesla shares to $475 from $380 on Thursday, citing stronger-than-expected deliveries in China.The new goal implies a 12% profit from the automaker’s Thursday closing price of $423.43. China is a”key market” to get Tesla that could constitute 40 percent of global sales as soon as 2022, Ives said.The analyst also mentioned the automaker’s September 22 Battery Day as a”linchpin event” because of his greater valuation goal. Watch Tesla trade reside here.

Tesla deliveries in China are tracking higher than anticipated over the next quarter, contributing Wedbush to raise its price target for the electric automaker.

Analyst Dan Ives increased the company’s goal to $475 from $380 on Thursday, indicating that a 12% rally in the firm’s Thursday closing price of $423.43. The country is a”key market” to get Tesla moving ahead, Ives explained, since the automaker’s Gigafactory in Shanghai stands to increase Model 3 margins over those seen in the US and Europe. 

“Pent-up demand” and current price reductions are fueling”increased market share vs domestic competitors as the Giga 3 success story continues to play out,” the analyst added.

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Ives maintains a”neutral” rating on the shares.

Wedbush sees”clear momentum” to get Tesla sales in China throughout the rest of the year. The firm increased its third-quarter deliveries estimate consequently, to 130,000 vehicles in 124,000. The new goal marks a 34% improvement from the year-ago interval and sets Tesla up to achieve 470,000 complete deliveries in 2020.

Ives also projects China deliveries to constitute 40 percent of Tesla’s order book as soon as 2022.

For investors seeking a near-term boost to the automaker’s share price, Tesla’s September 22 Battery Day will function as a”linchpin event” to get a loftier valuation, Wedbush explained. The business is expected to unveil new battery mobile technology and a power apparatus able to push for a million miles.

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The new cells will also be set to reduce production expenses, and doing so”would give Tesla much more financial flexibility” to price its models with heritage automakers, Ives explained.

Tesla closed at $423.43 per share Thursday, up 406% Nominal.

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