Shares of Tesla Inc. rose Monday toward a second straight record, after Wedbush analyst Dan Ives raised his target to be the fourth-highest on Wall Street, citing signs of accelerating demand in China.
But while his target represents a 15% rally above Friday’s record close of $1,650.71, Ives still doesn’t recommend investors buy the stock.
Tesla shares climbed 8.3% in afternoon trading, adding to the 20.1% surge over the previous three sessions, in the wake of the electric vehicle maker’s announcement of a 5-for-1 stock split.
Don’t miss: Tesla’s stock run leads to 5-1 share split.
Ives raised his price target to $1,900 from $1,800. Of the 35 analysts surveyed by FactSet, Ives’s target is now only below the $2,400 target of Piper Sandler’s Alexander Potter, Oppenheimer’s Colin Rusch’s target of $2,209 and the $1,903.97 target of Everbright Securities’ Yu Jing Ni.
Ives’s “base case” target is well above the average target of $1,235.37, which is 25.2% below Friday’s closing price. Meanwhile, Ives’s “bull case” target is $2,500.
Meanwhile, he reiterated the neutral rating he’s had on the stock since April 25, 2019. At that time, his price target was $275.
“We continue to believe [electric vehicle] demand in China is starting to accelerate in July/August with Tesla competing with a number of domestic and international competitors for market share with Giga 3 remaining the linchpin of success which remains the prize that [Chief Executive Elon] Musk and Tesla are laser focused on capturing,” Ives wrote in a research note.
Giga 3 is the factory Tesla operates in Shanghai.
“We are seeing more leverage in the story now on the horizon out of Giga 3 along with some price cuts both in the US and China that could further stimulate demand as the macro starts to improve and the lockdown conditions ease globally,” Ives wrote.
He expects Tesla to announce a number of new potential “game changing” battery developments at the company’s Battery Day event, scheduled for Sept. 22, including a “million mile” battery.
“In theory, this battery will support an electric vehicle for 1 million miles and be a major step forward when competing versus. traditional gasoline powered automotive competitors from both a [return on investment] and environmental perspective,” Ives wrote.
Tesla’s stock has more than doubled (up 123.6%) over the past three months, while shares of China-based rival Nio Inc. NIO, +5.66% have skyrocketed fourfold (up 311.6%) the S&P 500 index SPX, +0.35% has climbed 18.2%.
Over the same time, Ives’s price target has more than tripled, as his price target as of May 17 was $600.
Meanwhile, General Motors Co.’s stock GM, +7.46% jumped 8.0% toward a two-month high, after Deutsche Bank analyst Emmanuel Rosner pushed for the automaker to spin off its EV business into a separate entity. Rosner, who rates GM a buy, said he was adding the stock to Deutsche Bank’s short-term Catalyst Call Buy List.
Rosner said he believes an EV spinoff would force the market to recognize its EV technology and upcoming vehicle lineup, “unlock considerable shareholder value,” give the new entity access to cheap capital and provide the new entity with the ability to attract high-caliber talent.
GM’s stock has gained 322.9% over the past three months, but has dropped 17.8% year to date, while Tesla’s stock has skyrocketed more than fourfold (up 327.2%) this year.