Wedbush Securities has raised its price target for Tesla Inc (NASDAQ:TSLA) shares to $200 from $175 and repeated its ‘outperform’ recommendation in the wake of the EV marker’s better-than-expected fourth-quarter results.
According to the US investment bank, there was a lot riding on Tesla's figures as the Street was anxiously focused on the demand outlook for 2023 along with the margin trajectory.
However, Wedbush said Tesla delivered in ‘epic fashion’ with demand that is currently twice the production coming out of the gates in 2023.
Tesla kept its 50% delivery growth target, but chief executive Elon Musk gave a ‘hittable/beatable’ delivery target this year in the ‘circa 38% growth range’.
Wedbush views this as conservative with the China demand picture rebounding meaningfully post the recent Model Y/3 price cuts.
In the quarter, the carmaker missed its automotive gross margin targets by roughly two percentage points but importantly gave some better-than-feared commentary about AGM going into 2023. This, analysts said, should allay fears on the Street post-price cuts.
While in the near-term Tesla is sacrificing margins for higher volumes, Wedbush views this as the right strategic move to put an iron fence around its customer base and fend off growing electric vehicle competition coming from Detroit, Europe, and China.
CEO Musk addressed the Twitter situation on the conference call and said he is embracing the complex spider web relationship between Twitter and Tesla which will have a mixed reaction from investors.
However, with Twitter noise starting to slowly dissipate and the demand story roaring out of the gates in 2023 despite a darker macro, Wedbush walk away from this call ‘incrementally more bullish on Tesla into 2023’.