Tesla’s (TSLA) price target was raised to $550 at Wedbush Securities, which foresees the electric vehicle maker issuing strong delivery guidance underpinned by its business in China.
The previous price target was $370 per share, and Wedbush maintained a neutral rating on the stock in its note Wednesday. The price-target hike appeared to help Tesla shares jump by as much as 8.6% to an intraday high of $594.45. The surge pushed Tesla’s market capitalization above $100 billion for the first time.
“With the drumroll of Tesla bulls now focused on earnings next week,” said Wedbush in a Wednesday note, “we believe Musk & Co. will not disappoint as underlying strength in China and Europe demand appear robust based on our analysis.” Musk refers to Tesla Chief Executive Elon Musk who, based on a company compensation plan, could earn options of at least $340 million if the $100 billion market cap is stable, according to CNBC.
Tesla’s fourth-quarter financial results are due after the bell on Jan. 29. A key 500,000 delivery threshold in fiscal year 2020 “is well within reach” for the company, said Wedbush analysts Daniel Ives and Strecker Backe. They said analysis on a Chinese demand scenario suggests Tesla could potentially post a “game-changing” delivery figure of 1 million vehicles by 2022, two years ahead of Wedbush’s original projection of 2024.
“In our opinion, the new long term bull case scenario on the stock is $900 with Tesla’s ability to ramp production and demand in the key China region during the course of 2020/2021 a major swing factor on the stock,” the analysts wrote.
Tesla earlier this year began delivering the Model 3 sedans made at this factory in Shanghai, with the cars finished less than a year after Tesla began production at the plant. Wedbush also said demand for the European Model 3 “looks healthy” through at least the next three to four quarters based on its analysis.
In China, price cuts around the Model 3 would help spur demand in a country steeped in competition in the electric-vehicle market, said Wedbush, and some other lower-priced vehicles could be a hurdle for Tesla down the road. However, Tesla “has the most impressive product roadmap out of any technology/auto vendor around,” and stands to be a “driving force for the EV transformation over the next decade with Model 3 front and center,” the analysts said.