Why This Tesla Analyst Thinks Worst May Be Behind For The EV Pioneer

Zinger Key Points
  • A Mizuho Securities analyst sees Tesla bouncing back as supply chain challenges improve.
  • The new Gigas in Texas and Berlin may help counterbalance the production-constrained Shanghai plant.
Why This Tesla Analyst Thinks Worst May Be Behind For The EV Pioneer

Tesla, Inc's TSLA stock received a string of price target cuts from sell-side analysts, who blamed their tempered expectations on the slow ramp-up of production at the Giga Shanghai plant. There now appears to be a break in the negative sentiment engulfing the stock.

What Happened: Tesla stock could rocket higher in 2022 as the bear-case scenario fades, Mizuho Securities analyst Vijay Rakesh said in a note on Tuesday, according to Tesmanian.

Rakesh was commenting after Tesla hosted him at the Fremont, California factory.

The analyst said Tesla faces near-term headwinds as Giga Shanghai, which makes up about 40-50% of its total capacity, has yet to produce at pre-lockdown rates. This, however, sets Tesla up for a strong second-half rebound, he added.

Related Link: Elon Musk On Tesla's Long-Term Growth: Why It Hasn't Even Reached 0.1% Of Future Potential

April deliveries may have been at 40,000 units, down 22% from January's 51,000 units, Rakesh noted. This, according to the analyst, could lead to a sequential revenue decline in the June quarter.

"That said, we believe a potentially stronger SepQ/DecQ rebound is possible with improved supply chains and Berlin ramping," Rakesh said.

Why It's Important: Tesla's Giga Shanghai has begun running two shifts since last week, and it is rumored that production at the plant may have returned to 70% of pre-COVID levels.

The opening of two new Gigas in Texas and Berlin may take some pressure off the production-constrained Shanghai plant. Giga Shanghai, however, is important, not only from the perspective of output, but also for margins.

Rakesh reaffirmed his Buy rating and $1,300 price target for Tesla stock.

Tesla shares were up 1.06% on Wednesday morning at $766.28, according to Benzinga Pro.

Posted In: electric vehiclesMizuho SecuritiesVijay RakeshAnalyst ColorReiterationAnalyst RatingsTechMedia