When looking at V-shaped recoveries, they hardly come more V-shaped than that of Tesla’s (TSLA). Hitting all-time highs in February, then plummeting along with the rest of the market, the EV pioneer’s fortunes appear to be speeding upwards yet again, as the swift recovery has led Tesla stock to a year-to-date gain of 115%.
According to Wedbush analyst Daniel Ives, the moving parts are all falling into place for Tesla. The fact that Fremont is up and running again following the resolution of the Musk vs Alameda County quarrel combined with strong demand in China for Model 3 vehicles suggest a “solid May and June likely in the cards and clear momentum heading into 2H.”
That said, it is China and the attendant opportunity that is mostly on Ives’ mind. The 5-star analyst believes the China growth story is “worth $300 per share to the stock.”
In a difficult pandemic-driven environment, Chinese demand for Model 3s remains “a ray of light” for Tesla, with the Shanghai-based Giga 3 factory seemingly on the path to deliver 100,000 Model 3 units in its first fully operational year.
Ives argues there is increasing demand for electric vehicles in China, and maintains “EV penetration is set to ramp significantly over the next 12 to 18 months,” with Tesla competing for market share supremacy along with several local and international rivals.
Looking ahead, Ives said, “The Street will be closely monitoring demand trends across Europe and China over the coming month as the focus of investors shifts to a more normalized (depending on COVID) environment heading into year-end and 2021 and what this dynamic means for the long-term earnings trajectory going forward.”
At this point, however, Ives prefers to watch this bullish story play out from the sidelines. The analyst keeps a Neutral rating on TSLA, although the price target gets a significant bump – moving up from $600 to $800. Despite the increase, the target still indicates possible downside of 9%. (To watch Ives’ track record, click here)
Opinion on the Street regarding Musk & Co is almost evenly split. 9 Buys and Holds each, along with 10 Sells add up to a Hold consensus rating. However, it appears most believe Tesla has surged enough for now, as the average price target comes in at $633.14, and implies the analysts expect shares to drop by 28% over the next 12 months. (See Tesla stock analysis on TipRanks)
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