Tesla Price Target Doubled by UBS Ahead of ‘Battery Day’

Analysts at UBS double their one-year price target on sales-margin improvement ahead of Tesla's upcoming 'Battery Day' reveal.
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Tesla  (TSLA) - Get Report on Friday received a double one-year price-target upgrade from UBS on expectations of sales-margin improvement and market-buzzing news at the electric carmaker’s upcoming "Battery Day" event.

UBS analyst Patrick Hummel doubled his one-year price target to $325 from $160 amid what he expects to be improving volumes and margins, and some strong reveals at "Battery Day."

In a note to clients, Hummel said he expects the Sept. 22 event to be “significant,” in particular with the reveal of new dry electrode battery cell technology that will fortify Tesla’s “cost and technology lead for several more years.”

UBS said the dry electrode technology is likely to enable a 50% higher energy density of up to 400 watt hours per kilogram (Wh/kg) vs. 260 Wh/kg today, as well as allow “much better longevity” in batteries with “potentially a cobalt-free chemistry.”

As a result, Hummel's team now expects Tesla to sell 2 million vehicles in 2025, around 15% of global battery electric vehicle market share.

The new cell design could also be used in the Tesla’s new Cybertruck and other models, including the Roadster, though the analyst noted that much of those announcements and expectations are “already fully discounted” in the stock price. Hummel maintained his neutral rating on the shares.

Meantime, Bloomberg reported on Friday that Tesla was preparing to ship cars made at its new Shanghai Gigafactory to other markets in Asia and Europe.

Citing people familiar with the matter, Bloomberg said China-built Tesla Model 3s intended for delivery to Singapore, Australia, New Zealand and Europe likely will start mass production in the fourth quarter, speeding up the wait times for customers in those regions.

Shipments could start as soon as the end of this year or early 2021.

Shares in Tesla have rallied almost 500% from January to the end of August as investors piled into tech stocks in general, and also bought in to Tesla's and Elon Musk's longer-term plan to dominate the electric-vehicle market. 

So far this month, the stock has given back roughly one-fifth of those gains. The stock was down 0.95% at $367.80 in Friday trading.