Stick with Tesla because the next several years may look far different than a first quarter hammered by the aftershocks of the coronavirus.
Tesla (TSLA) bull Dan Ives of Wedbush Securities concedes the first quarter will likely be a nightmare for the electric car maker as the coronavirus stunts demand and production in the key market of China (and to a lesser extent, Europe). But Ives believes the longer term outlook remains promising as Tesla continues to assume a leadership position in the EV market.
“The first quarter isn’t going to be pretty, especially in China,” Ives said on Yahoo Finance’s The First Trade. “You look at over the next one, two and three years, can they get to 100,000 Chinese units in the first year? I believe that is something that will be a stretch, but ultimately I think four to five times the U.S. market in terms of opportunity.”
Ives has a Neutral rating on Tesla’s stock with a price target of $710.
The market appears to agree with Ives, for now. Tesla’s stock is only down about 16% in the past month, relatively in-line with the pullbacks in the Nasdaq Composite and S&P 500. If Tesla was losing believers after a tremendous run fueled by improved financial performance, the often volatile stock would be severely outperforming.
“The recent market-driven pullback provides investors with a good opportunity to enter the stock in our opinion, and a perusal of offerings from competitors suggests that Tesla’s market position should continue to be dominant,” said JMP Securities analyst Joseph Osha. “Investors may find themselves with additional near-term opportunities to buy the stock as Tesla works through the first half of 2020 and the impact of COVID-19 becomes apparent.”