January’s stock market action provided a white-knuckle ride for most. Of course, the wild action comes against a backdrop of a tightening Fed and what Wedbush’ Daniel Ives terms a “valuation scrutinized market,” which has especially impacted the growth space. Often cited as the poster boy for overvalued stocks, Tesla (TSLA) stock has also been under “considerable pressure.”
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However, with the EV leader about to report Q4 earnings on Wednesday after the close (Jan 26), and demand currently outstripping supply by roughly 30% globally according to Ives’ estimates, the analyst believes the “emerging fundamental story at Tesla will be back in focus.”
As Tesla has already reported Q4 deliveries, the Street has some idea of what’s in store. The company put in a “robust” performance in the quarter, which despite the global chip shortages’ impact on many of its peers saw Tesla beat the Street’s unit forecasts by 16%.
As for the headline numbers, the 5-star analyst believes the Street’s estimates for Q4 of $16.3 billion in revenue and EPS of $2.26 are “very beatable.”
With 2021 out of the way, all focus will turn to the company’s outlook for deliveries, the “overall growth/profitability trajectory for 2022 and beyond,” the chip shortage headwinds and Giga Austin/Berlin launch dates.
With Tesla’s “high-class problem” of demand outstripping supply resulting in ~5-6 month delays in some parts of the world, the Giga openings will be key to alleviating these issues.
Pre-production is already underway at the Austin facility and pending resolution of Europe logistics issues, Berlin should open soon too. With these solving the global bottlenecks of production, Ives believes that by the end of 2022 Tesla’s capacity will increase from roughly 1 million today to ~2 million units annually.
To this end, Ives reiterated an Outperform (i.e., Buy) rating along with a $1,400 price target. Should the target be met, investors are looking at upside of 52% from current levels. (To watch Ives’ track record, click here)
Overall, there are plenty of Square bulls amongst Ives’ colleagues, although some are not quite as convinced. TSLA’s Moderate Buy consensus rating is based on 15 Buys, 8 Holds and 7 Sells. Going by the $1074.69 average target, shares will see 17% growth in the year ahead. (See Tesla stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
