Analysts at Wedbush upgraded Tesla Inc (NASDAQ:TSLA) to Outperform from Neutral on Sunday after the company logged record-setting quarterly vehicle delivery numbers marking a “paradigm changer” for the electric car maker.
Wedbush analysts Daniel Ives and Strecker Backe also added Elon Musk’s automaker to the Wedbush Best Ideas list with a new $1,000 price target (versus the brokerage firm’s previous $950) and $1,300 long term bull case.
“In our opinion the 1Q delivery numbers released on Friday was a paradigm changer and shows that the pent-up demand globally for Tesla's Model 3/Y is hitting its next stage of growth as part of a global green tidal wave underway,” said Ives and Backe.
“We now believe Tesla could exceed 850,000 deliveries for the year with 900,000 a stretch goal, despite the chip shortage and various supply chain issues lingering across the auto sector. While the EV sector and Tesla shares have been under significant pressure this year, we believe the tide is turning on the Street and the 'eye popping' delivery numbers coming out of China cannot be ignored with the trajectory on pace to represent around 40% of deliveries for Musk & co by 2022.”
On Friday, Tesla reported first-quarter deliveries, totaling 184,800 vehicles, blowing past the Street's 172,230 estimate as the company yet again defied skeptics. Production was 180,338 vehicles for the quarter.
“Tesla announced 'drop the mic' 1Q delivery numbers which handily exceeded Street expectations and was well ahead of the bull whisper number,” said the Wedbush analysts.
The analysts noted that the strength in the quarter was driven by Model 3/Y which was “a jaw dropper” and came in at 182,780 deliveries and crushed the consensus estimate of 160,230 for the quarter.
Wedbush also see Tesla’s profitability significantly improving over the next three to four years.
“We believe Tesla's profitability/FCF profile significantly improves over the next 3 to 4 years with $20 of annual EPS potential by 2026 based on our projections,” said Ives and his team.
“With a green tidal wave kicked off by Biden last week in the US, and global EV demand skyrocketing (as also seen in the Nio and Xpeng numbers) going after a $5 trillion TAM over the next decade, we believe these delivery numbers are a paradigm and sentiment shifter for the space going forward.”
Wedbush said that with 3% of auto sales cornered by EVs today globally, on a clip to be 10% by 2025, the EV market is “just starting to play” out as the auto sector turns green over the coming years with “Tesla leading the charge."
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