To much fanfare and anticipation, Tesla (TSLA) unveiled its new Model Y crossover electric vehicle late last week — but while hopes were high, share prices dropped 5% on the announcement, as many felt it was extremely underwhelming. Tesla has been one of the market’s worse performers year to date, down nearly 18% for the year.
But nevertheless, Wedbush analyst Daniel Ives maintains his Outperform rating on the stock with $390 price target, as he remains positive coming off a visit to the company’s Giga EV battery factory in Nevada and its Fremont, CA factory. (To watch Ives’ track record, click here)
Production has been the name of the game for Tesla, as the company has until recently struggled to hit production pledges. Ives says, “after spending a few days with the Tesla team and seeing the evident changes around streamlining its battery/auto production efficiency, we walk away incrementally more positive on the long-term bull story for Tesla seeing the forest through the trees on the name.”
Though the analyst concedes there is a lot of “noise” surrounding the company, including CEO Elon Musk’s battle with the SEC and Model 3 demand, he remains positive on Tesla’s car-making ability. Speaking on the gigafactory, Ives believes “Tesla continues to clearly streamline its battery manufacturing efficiency process to a point that is a major competitive advantage vs. encroaching EV competitors who have not gone through the rigorous learning process” that Tesla has gone through.
Ives points out that “Model Y production/assembly set to take place in 2020 will be fully out of Giga which has the layout to significantly expand in Sparks and could translate into higher profitability for this key new model out of the gates.” While looking at the Fremont factory, Ives says “it’s all about Model 3 deliveries for Europe as the laser focus across the factory floor and ‘tent’ is producing vehicles heading onto the cargo ship for Belgium (sole port for Europe deliveries/logistics) as well as China.”
Ives believes production is less a challenge for Tesla as it has been in the past, so the company and investors are able to focus on “on the demand opportunity” for the Model 3 in the US and China. The analyst says, “we believe Tesla with the Model 3 has the opportunity to transform consumer auto buying behavior and capitalize on this unprecedented market opportunity,” as the company shifts focus to car-selling vs. car-making.
While Tesla is a hot-button item in the news, Wall Street doesn’t quite know how to judge its stock. TipRanks analysis of 25 analyst ratings shows a consensus Hold rating, with nine analysts recommending a Buy, seven analysts recommending Hold and nine suggesting a Sell. The average price target among these analysts stand at $312.57 on the stock, representing a 14% rise from its current trading price. (See TSLA price targets and analyst ratings on TipRanks)