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Bloomberg
Tesla Inc’s growth potential in China means the stock is undervalued even after a recent rally pushed the shares almost to $500 apiece, analysts at Piper Sandler Cos said while boosting their target price by more than 30%.
Piper raised its target to $553 from $423, making it the most bullish among forecasters tracked by Bloomberg. The stock has doubled in the past three months, closing at a near-record $481.34 on January 9. The stock reached as high as $498.80 intraday, and the market capitalisation has come level with the combined values of automaker peers General Motors Co and Ford Co.
The electric-vehicle maker started delivering its China-built Model 3 sedans to local customers last week, a year after its first factory outside the US broke ground. Tesla’s sales in China are set to double to 225,000 cars next year from 112,000 in 2020, Piper estimates.
“Bottom line: If Tesla’s Model 3 market share in the United States can be replicated in China — and if this logic extends also to Model Y — then Tesla’s annual volume in China alone would eventually exceed 650k units,†Piper analyst Alexander Potter said in the January 9 note.
Tesla shares rose 0.7% to $484.50 at 6:30 am in pre-market trading on January 10. The stock gained 26% last year while hte S&P 500 rose 29%.
Last year, Tesla delivered a record 367,500 vehicles globally. The company faces stiff competition in China from BMW AG, Daimler AG and Volkswagen AG’s Audi, making it unclear if it can replicate its US success in the country, Piper said.