Benzinga - by Shanthi Rexaline, Benzinga Editor.
Following Tesla, Inc.’s (NASDAQ:TSLA) first-quarter earnings release, Wedbush analyst Daniel Ives maintained his bullish recommendation.
The Tesla Analyst: Ives maintained an Outperform rating, but reduced the price target from $300 to $275, citing his lowered estimates for the company.
The Tesla Thesis: Tesla delivered a “rip the band-aid off 1Q,” with the disaster results widely expected by the Street following the weak quarterly delivery numbers, said Ives in a note. The focus of the analysts and investors was, however, around the blueprint and roadmap for growth, he said.
The analyst also approved of CEO Elon Musk’s earnings call comments. “In a much-needed conference call Elon Musk finally stepped up as the adult in the room and laid the foundation for Tesla’s growth strategy, with most importantly a lower cost vehicle now slated for 2025 production and delivery,” he said.
This quelled anxiety among investors that Musk would take Tesla straight to robotaxis and essentially ditch the low-cost Model 2 vehicle, he had.
“Instead it appears a ‘Model 2.5’ will be the answer with a lower cost EV vehicle that we believe will be in the $25k-$30k range that uses ‘aspects of the next-gen platform’ as well as the current platform and will
be produced on current factory lines,” Ives said.
More importantly, the timeline for such a vehicle has been accelerated from the second half of 2025 and this EV will be key to Tesla’s volume turnaround in 2025, he said, adding “While it’s not a next-generation Model 2 platform, we believe this is the right strategy and move at the right time.”
The autonomy and full self-driving, according to Ives, is a key longer-term strategy but he sees regulatory hurdles and technology challenges serving as pushbacks.
“Clearly Tesla is going through a challenging period of delivery growth and this story will not turn around overnight so patience is required,” the analyst said. But he is encouraged by Musk taking tighter control of the reigns of Tesla, the lower-cost vehicle on the roadmap, cost cuts, FSD advancements, and ample financial power/treasure chest.
Ives cautioned of potential execution missteps. “Execution of the lower cost vehicle and driving incremental demand in the key China market must be flawless….otherwise this could derail the bull thesis in the next 6 to 12 months,” he said.
The “next wave of the Tesla growth story” and the “autonomous vision” was now forming, reinforcing Wedbush’s bullish thesis, the analyst said.
Tesla Price Action: In premarket trading on Wednesday, Tesla climbed 11.57% to $161.42, according to Benzinga Pro data.
Tesla Photo by Sheila Fitzgerald on Shutterstock
Latest Ratings for TSLA
| Feb 2022 | Daiwa Capital | Upgrades | Neutral | Outperform |
| Feb 2022 | Piper Sandler | Maintains | Overweight | |
| Jan 2022 | Credit Suisse | Upgrades | Neutral | Outperform |
View the Latest Analyst Ratings
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