Tesla rides higher after Daiwa turns bullish
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Daiwa upgraded Tesla (NASDAQ:TSLA) to an Outperform rating after having the EV stock slotted at Neutral.
The firm pointed to Tesla's (TSLA) ability to export out of cost-efficient China and history of managing chip shortages last year better than peers as factors that could strengthen its competitive position under the current Russia/Ukraine situation.
"At the same time, higher oil prices and potential scenario of fuel shortages, especially in Europe, could accelerate the shift to EVs. While start of production at the Berlin plant could be delayed, recent media reports of Tesla increasing capacity at its Shanghai facility gives it more flexibility to meet European demand. Media reports indicated that Tesla is expanding its current Shanghai gigafactory to produce close to 1mn units annually."
Daiwa also noted that Tesla (TSLA) is planning to build a new plant in the vicinity of its existing plant with an incremental capacity of 1M units and the Austin plant will raise capacity by up to 500K units over time. On the other hand, the current situation with Russia and Ukraine seems more perilous for Tesla's competitors.
Also seen working in Tesla's (TSLA) favor, Daiwa thinks declining profit contribution from ICE vehicles could slow down investments into EV expansion being targeted by competition.
Shares of Tesla (TSLA) rose 1.31% premarket to $811.30.
Daiwa's price target on TSLA of $900 reps 12% upside potential.
Tesla trades at its biggest discount to the average analyst price target over the last five years.