Tesla Has 'Apple-Like Consumer Brand' Potential, Wedbush Says In Bullish Initiation

After a tumultuous three-month stretch from August through October, Tesla, Inc. TSLA has once again found its stride, trading back near all-time highs. On Friday, one Wall Street analyst said Tesla’s third-quarter momentum should continue in 2019 — and the worst of Tesla’s Model 3 production difficulties are now in the rear-view mirror.

The Analyst

Wedbush analyst Daniel Ives initiated coverage of Tesla with an Outperform rating and $440 price target.

The Thesis

Tesla is one of the most dynamic and innovative companies seen in the past 30 years, joining the ranks of companies like Apple, Inc. AAPL and Amazon.com, Inc. AMZN, Ives said in the Thursday initiation note. (See his track record here.) 

Tesla's innovation is clear, but the $1-million question is how to value the stock, the analyst said. 

“From a potential capital raise on the horizon, laser-focused Model 3 production metrics and profitability trajectory, lingering SEC/DOJ overhang stemming from Musk’s 'going private' tweetstorm, to China TAM and the investments needed to get there, are just a few of the main debatable investor topics around Tesla over the next 12 to 18 months."

Investors should expect the bumpy road to continue for Tesla stock in the near-term, Ives said. Yet Tesla is poised to significantly ramp up Model 3 production and free cash flow in 2019, he said. 

In the long-term, Ives said Tesla has the opportunity to grow into a consumer brand similar to the Apple ecosystem.

Price Action

Tesla stock was down 0.79 percent at $373.83 at the time of publication Friday and is up 10.4 percent overall in the past year.

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Photo courtesy of Tesla.