Tesla shares motored higher Thursday after a Wedbush analyst argued that the apparent turnaround by the electric-vehicle maker is for real.
Shares of the Elon Musk-led electric automaker rose more than 1 percent Thursday, marking another day of gains after Daniel Ives of Wedbush boosted his price target to $370 USD from $270 (via MarketWatch).
“Both US consumer demand for Model 3 and most importantly European strength should likely drive upside this quarter and enable Tesla to comfortably hit its vehicle delivery guidance of 360K–400K units for [the 2019 fiscal year], which represents an increase of 45% to 65% year-over-year,” Ives wrote in a note to clients.
“While part of this recent rally has been a massive short-covering, it has also been driven by underlying fundamental improvement as the company’s ability to impressively not just talk the talk but walk the walk has been noticed by the Street and the optimism around the story has grown markedly from the dark days seen earlier this year,” Ives continued.
While Ives isn’t completely sold on the turnaround story yet, he wrote that recent data points from Europe and China are positive and led him to raise his target price by $100. His target price is still roughly 13% lower than where Tesla shares closed Tuesday, and he reaffirmed his neutral rating on the stock.
The company could comfortably hit its vehicle delivery guidance of between 360,000 and 400,000 units for 2019, according to Ives. That’s a year over year increase of 45 percent to 65 percent. If Tesla can sustain its current level of profitability and demand, the stock “will open up a new chapter of growth and multiple expansion,” Ives wrote.
Going forward, Tesla’s future growth is heavily dependent on China, and so the Giga 3 ramp and demand in the region will be “front and center” for investors over the next 12 to 18 months, Ives wrote.
“If Tesla is able to sustain this level of profitability and demand going forward, especially in Europe and China, then the stock (and bull thesis) will open up a new chapter of growth and multiple expansion in our opinion,” Ives wrote.
After investor skepticism, earlier this year over Founder Elon Musk’s ambitious plans and worries about a global economic slowdown, Tesla’s stock has rebounded in the past three months.
