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Tesla Analyst Raises Price Target To $500 Ahead Of Q3 Print

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Tesla Analyst Raises Price Target To $500 Ahead Of Q3 Print

With Tesla Inc (NASDAQ: TSLA) scheduled to report third-quarter results Wednesday, an analyst at Wedbush is optimistic that the electric vehicle giant will outperform expectations.

The Tesla Analyst: Daniel Ives maintained a Neutral rating on Tesla shares and increased the price target from $475 to $500.

The Tesla Thesis: The focus is likely to be on Tesla's level of third-quarter profitability and the unit growth trajectory into the fourth quarter, Ives said in a Monday note. 

The company is poised to report a bottom-line beat, helped by manufacturing efficiency and shining Giga3 success in China, the analyst said.

Full-year deliveries are on track to hit the company's guidance of 500,000, as Tesla navigated the unprecedented COVID-19 backdrop, he said. 

"We believe with a strong 4Q that Tesla will be on a pace to hit the 500k threshold as pent up China demand and pockets of strength within Europe remains the linchpin to the demand resurgence that Musk & Co. have seen over the past few quarters," Ives said. 

Related Link: What To Expect When Tesla's Q3 Report Drops Next Week

With China expected to account for over 40% of Tesla's global sales potentially by early 2022, Tesla's profitability profile will improve, as Model 3s sold in China have higher margins, the analyst said.

Along with more leverage on the horizon out of Giga 3, more price cuts both in the U.S. and China could stimulate demand further, he said. 

"Steady profitability after years of red ink has been the 'hearts and lungs' to the bull thesis on the Street and a key ingredient in the stock's performance this year." 

The overall EV market is still in the early days of playing out globally, according to Wedbush.

Tesla is in a formidable position to maintain its leadership position despite competitors coming from every angle globally, Ives said. 

TSLA Price Action: Tesla shares were down 0.49% at $437.53 at last check Monday. 

Related Link: Tesla Analyst Sees Disconnect Between Share Price, EV Company's Fundamentals

Photo courtesy of Tesla. 

Latest Ratings for TSLA

DateFirmActionFromTo
Nov 2020WedbushMaintainsNeutral
Nov 2020Morgan StanleyUpgradesEqual-WeightOverweight
Nov 2020B of A SecuritiesMaintainsNeutral

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