Analyst Raises Tesla Bull-Case Target To $3,500, Sees $35 EPS Potential In China Alone

The insane run by Tesla Inc TSLA in 2020 continued on Monday morning, and one analyst once again raised his bull-case price target for the stock.

The Tesla Analyst: Wedbush analyst Daniel Ives reiterated his Neutral rating and $1,900 price target for Tesla, but raised his bull-case scenario target from $2,500 to $3,500.

The Tesla Thesis: Ives said Tesla’s upside potential continues to grow due to its potential in the Chinese auto market and its potential to be a global battery powerhouse.

Ives said China could represent more than 40% of Tesla’s total sales by 2022.

“Model 3 demand out of China remains a linchpin of success and appears to be on a run rate to hit 150k unit deliveries in the first year out of the gates for Giga 3 which is driving some strength for Tesla as well as Model Y deliveries starting to ramp as well,” he wrote in a note.

Despite the global COVID-19 disruption, Ives said China has Tesla on track to hit its target of 500,000 deliveries in 2020 and 1 million deliveries in 2023.

In the near term, he said the next catalyst for the stock is the company’s Battery Day event on Sept. 22. Ives said production costs will be a key for the battery business, and breaking below $100/kWh could provide Tesla with ample financial flexibility.

Looking ahead, Ives said China could provide Tesla with more than $35 in EPS by 2025 or 2026. However, with the stock already up 908% in the past year, his base-case price target suggests the stock could be due for a pullback at some point.

Benzinga’s Take: The most optimistic projections for revenue growth for the second half of 2020 are nowhere close to the 900% Tesla shares have gained, and Tesla was still barely profitable as of the second quarter. At this point, it’s difficult for even the most bullish analysts like Ives to recommend investors buy the stock at current prices.

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