Is the storm finally in the clear for Tesla Inc (NASDAQ:TSLA) and its challenged Model 3 production? CEO Elon Musk is known for his ambitious goals, and his electric car giant might at last be tracking to hit the slippery weekly production target of 5,000 Model 3 vehicles.
GBH Insights analyst Daniel Ives sees the ghosts of Model 3 obstacles past finally dissipating, forecasting the company is approaching 500 to 600 Model 3 cars being built each day. In crunching these numbers, Ives projects the giant is poised to achieve Musk’s goal by the end of the month- especially taking under account the latest commentary from the TSLA leader.
Accordingly, Ives has become more upbeat on the tech player’s Model 3 production firing up and anticipates cash burn will be less severe around the corner. The analyst reiterates an Attractive rating on TSLA while boosting the price target from $320 to $375, which implies a close to 18% upside from current levels. (To watch Ives’ track record, click here)
The company just opted to halt production at its flagship Fremont factory for a positive intent: to tackle solutions and bottlenecks to the assembly line of the volatile Model 3 production story. Ives considers this seemingly a “successful initiative that has helped put Tesla on the ‘yellow brick road to 5,000 per week’.”
Ives recognizes a rocky months-long saga that has plagued investors with absolute exasperation circling the TSLA narrative. Encouraged, the analyst writes, “we are starting to see some clear rays of sunshine as the trifecta of Model 3 production ramps, ASP increases on Model 3, and the chances of a capital raise event moving into the background has given investors a clearer green light to own shares at current levels as some of the dark clouds are starting to dissipate. The linchpin of Tesla’s success going forward starts with Model 3 moving in the right direction after months of unforeseen speed bumps, as this remains key for the company’s long-term health and thus limit its cash burn situation which remains a lingering overhang on the stock. The core near focus for Tesla, Musk, and investors over the coming weeks is laser centered around ramping up Model 3 production efforts (on both the base and high-end models) to narrow the gap on the production line reaching the key 5,000 per week mark, which has been its Achilles heel.”
TipRanks suggests caution has a slight grip on Wall Street analysts surveying the electric auto empire. Out of 24 analysts polled in the last 3 months, the battle between the bulls, the bears, and the sidelined appears evenly split- with 7 bulls betting on TSLA stock, 10 analysts hedging their bet, and 7 bears running for the hills. However, target expectations appear to have more apprehension baked into expectations. The 12-month average price target stands at $302.67, marking nearly 5% in downside potential from where the stock is currently trading.