Canaccord Lifts Tesla Price Target Above $500 Amid International Opportunity

In mid-December, Tesla Inc TSLA broke a previously impenetrable $400 ceiling — and kept climbing. The automaker vindicated patient bulls and prompted some to raise the bar to even more ambitious heights.

The Rating

Canaccord Genuity analyst Jed Dorsheimer maintained a Buy rating on Tesla but increased his price target from $375 to $515.

The Thesis

By Dorsheimer’s perspective, the stars seem to be aligning for Tesla.

“We believe the trend towards electrification will only accelerate in 2020,” the analyst wrote in a note. He expects fourth-quarter delivery numbers to verify this trend.

“While bears have feared demand issues as a function of tax credit expiration for Tesla, we suspect a solid Q4 combined with the robust Q3 should put these fears to rest and put to rest this issue as the credit expires.”

Tesla is positioning itself to capitalize on rising demand with the new Model Y, spins on Models S and X, new drivetrain and energy storage technology enabling attractive, unmatched range. And it’s riding recent momentum. So far, its Model 3s have outpaced all other luxury EV sales by at least a 3-to-1 ratio, according to Canaccord, and international sales have not disappointed.

“As Model 3s roll off Tesla’s Chinese manufacturing facility with local subsidies intact, we believe the U.S.-based focus will need to shift globally for the company,” Dorsheimer wrote. “With deliveries beginning in China at the end of December, this market will be an important driver for the company in 2020.”

Price Action

At time of publication, Tesla's stock traded up 1.9% at $426.40 per share.

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