The Tesla (TSLA) juggernaut was virtually unstoppable in 2020. With less than a month gone in 2021, the EV pioneer has continued the upward trajectory. The stock has already accumulated 20% of gains year-to-date.
While remaining on the sidelines, Wedbush analyst Daniel Ives believes Tesla shares should have a bit more fuel left in the tank. The analyst boosted his price target significantly to $950 (from $715), implying ~12% upside from current levels. There's no change to Ives’ rating, which stays a Neutral (i.e. Hold) for now. (To watch Ives’ track record, click here)
Ives centers his thesis on China, where the analyst says consumer demand has skyrocketed into 2021. However, the uptick has not been solely for Tesla’s products but also for “impressive domestic competitors” such as Nio, Xpeng, Li Auto.
Naturally, what this indicates is that consumers’ overall appetite for electric vehicles is on the rise. According to Ives, this requires an expectation readjustment, and a positive one, at that.
“We have significantly raised our forecasts in our Wedbush Tesla Delivery Model with our expectations that Tesla now exceeds the 1 million delivery threshold in 2022 and could start to approach 5 million deliveries annually by the end of the decade if global EV demand continues at this pace,” the 5-star analyst said. “We believe overall that EVs, which make up 3% of global auto sales today, could reach 5% by the end of 2021 and 10% by 2025.”
China is not the only place where the EV race is heating up. Ives counts “150+ auto makers aggressively going after the EV opportunity globally,” although the analyst still considers the rising industry to be “Tesla's world and everyone else is paying rent.”
That said, the company needs to keep on its toes, especially where battery tech is concerned; Both Nio and General Motors are shaping up to be fierce competitors in this field, which could be a “key differentiator over time.”
More close to home, in the U.S. there is another potential "game changer." The incoming Biden administration will be backed by a Blue Senate and will have a decidedly green driven agenda; its policies will certainly be beneficial for Tesla and the overall EV sector.
“We believe while the impact of a Biden Administration taking the reigns in January (and a Blue Senate) will have wide reaching ramifications across all sectors, in particular the focus on environmental issues and reducing the domestic carbon footprint could have a dramatic impact for EV vehicles in the near-term,” Ives concluded.
Maybe so, but pertaining to Tesla, the rest of the Street will need further convincing. Based on 7 Buys, 14 Holds and 6 Sells, the analyst consensus - like Ives - rates Tesla a Hold. The bears are in the driving seat, as the average price target hits $577.22 and implies possible downside of 32% in the year ahead. (See TSLA stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.