Wedbush analyst Daniel Ives reiterated an Outperform rating and $1,100 price target on Tesla (NASDAQ: TSLA) while raising his bull case from $1,500 to $1,800.
Wedbush raised its Tesla bull case from $1,500 to $1,800 and reiterated its $1,100 price target on Tesla shares. The bull case was lifted to $1,800 as the analyst expects the manufacturer's factory in China to continue ramping up production. Ives estimates that car deliveries from Giga Shanghai will account for 40% in 2022. This is likely as the Chinese factory is already working on producing about 50,000 vehicles every month.
Ives said “[t]he linchpin to the overall bull thesis on Tesla remains China, which we estimate will represent 40% of deliveries for the EV maker in 2022. While PR/safety headwinds were front and center in China earlier this year, we have seen this demand trend reverse aggressively in a bullish way for Tesla into year-end with the company now on a ~ 50k monthly run-rate for China in 4Q that could ramp further into early 2022."
On October 23, Tesla shares originally received their $1,100 price target from Wedbush. Ives had increased the price target on Tesla from $1,000 while maintaining an “Outperform” rating. Ives noted that Tesla delivered solid top-line results, which were in line with analyst expectations. And the company margins blew away the Street’s expectations. These results are expected to speak to a new Tesla margin story going forward.
The auto gross margin was over 30% and roughly 250 bps ahead of Wall Street expectations, which highlights the massive leverage in the Tesla story now starting to take hold with Giga China now being front-and-center. And now, Tesla is on an EBITDA run-rate of about $13 billion, which is a staggering number considering the company is still in the early stages of building out its global EV moat.
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