Tesla (TSLA) - Get Report on Wednesday received a healthy price-target bump from Wedbush Securities analyst Dan Ives, who said the electric vehicle maker appears to be “turning the corner” in terms of both demand and production recovery following the coronavirus-induced global economic shutdown.
In a research note to clients, Ives said he was lifting his one-year price target on Tesla’s stock to $800, roughly a third higher than his previous target, though he held pat on the neutral rating he’s had on the company’s shares for more than a year.
Shares of Tesla were down 0.52% at $814.62 in trading on Wednesday.
"While Tesla (and every other auto manufacturer) is navigating this unprecedented Covid-19 environment, the company took a major step forward around fulfilling demand and production concerns with the Fremont artery now up and running after the Musk vs. Alameda County stand-off got resolved," Ives said in his note.
"While 2Q delivery numbers remain in flux due to a host of logistical issues as well as overall lockdown conditions now starting to ease across the U.S. and Europe, it appears underlying demand for Model 3 in China is strong, with a solid May and June likely in the cards and clear momentum heading into 2H," Ives said.
Ives’ positive outlook came as the electric carmaker announced another North America-wide sticker-price cut for its lower-cost Model 3 sedan. Tesla revealed that prices for the Model 3, its cheapest and most popular car, now start at $37,990 instead of $39,990.
Tesla also lopped $5,000 off the sticker price of its Model S Performance car, which now starts at $94,990. It did the same thing for the Model X, which starts at $80,000, but left the pricing of its newest Model Y offering unchanged.
The price cuts come as Tesla looks to bounce back from one of the steepest and most dramatic economic downturns in modern history. Tesla also cut its prices in China on imported Model S models and Model X vehicles by 29,000 yuan, though it is leaving prices on its China-built Model 3 unchanged.
However, another surge in political wrangling between Washington and Beijing could offset any rebound in demand - lower prices or not - putting a lid on additional share-price gains for Tesla through the rest of the year, according to a separate research note by Morgan Stanley.
Indeed, strained U.S.-China relations pose an even greater risk than the coronavirus-caused factory disruptions in Fremont, California, or the broader economy, wrote Morgan Stanley analysts, adding that a restart of the company’s car production in China, as well as its longer-term market potential in Asia, will be key for the stock looking ahead.