Tesla’s turnaround looks increasingly credible to Wedbush1 min read . Updated: 27 Dec 2019, 09:57 AM IST Tesla shares have been on a sharp upswing over the past few months after the electric vehicle maker reported a surprise profit for the third quarter and said it was ahead of schedule on its China plant and launch of its Model Y crossover.
Recent data from China and Europe suggest to Wedbush that the turnaround in Tesla Inc. may be real.
Wedbush analyst Daniel Ives raised his price target on the stock to $370 from $270, saying strong Model 3 consumer demand and profitability are on an “upward trajectory for the fourth quarter."
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“Both U.S. 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 360,000 to 400,000 units for 2019," Ives wrote in a note to clients. The analyst added that Tesla’s Shanghai Gigafactory is being built ahead of schedule and remains the fuel in the engine for the overall bullish China thesis.
“If Tesla is able to sustain this level of profitability and demand going forward, especially in Europe and China, then the stock will open up a new chapter of growth and multiple expansion," Ives said. He maintains a hold-equivalent rating on the stock.
Tesla shares have been on a sharp upswing over the past few months after the electric vehicle maker reported a surprise profit for the third quarter and said it was ahead of schedule on its China plant and launch of its Model Y crossover. The stock closed at a record $425.25 on Tuesday.
According to Ives, the rally was fueled by “massive short covering" in addition to improving fundamentals. S3 Partners said last week that a “significant amount of shorts have held their ground and taken their 2019 roller-coaster P/L ride in stride." Short interest now accounts for about 20% of available shares, down from 36% in May, according to S3.
This story has been published from a wire agency feed without modifications to the text.