Should you buy Tesla shares as Wedbush sees upside to $1,400?

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on Nov 19, 2021
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  • Tesla shares on Friday edged slightly higher after receiving a rating upgrade from Wedbush.
  • The firm upgraded the stock to buy from neutral and raised its price target to $1,400 from $1,100.
  • Analyst Dan Ives thinks TSLA could claim $2.5 trillion of the $5 trillion of the auto/software-driven market.

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On Friday, Tesla Inc. (NASDAQ:TSLA) shares edged slightly higher after receiving a rating upgrade from Wedbush Securities. The firm upgraded TSLA’s rating to buy from neutral, assigning a price target of $1,400 from $1,100. Analyst Dan Ives cited the company’s dominance in the electric vehicles market as a major catalyst.

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Ives thinks Tesla could claim $2.5 trillion of the $5 trillion auto/software-driven market. The analyst estimates that the Chinese opportunity could contribute $400 per share to the stock price in 2022, which pushes his bull-case price target to $1,800. 

Tesla shares have pulled back more than 9% since the 4th of November. However, the stock is still up more than 51% this year, thus outperforming the S&P 500 Index.

Tesla’s growth opportunity

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Given the exciting opportunity from the Chinese EV market, analysts now expect Tesla’s earnings per share to spike by more than 165% this year, before rising at an annual rate of about 73% over the next five years.

Therefore, Tesla is one of the best growth stocks in the auto industry, thus making it an exciting option for long-term investors.

From a valuation perspective, the stock trades at steep trailing 12-month P/E and forward P/E ratios of 355.74 and 135.71, respectively. As a result, value investors could opt for alternatives in the market.

Source – TradingView

Technically, Tesla shares seem to have recently advanced to complete a channel breakout from a sharply descending channel formation. As a result, the stock has surged closer to the overbought conditions of the 14-day RSI.

Therefore, investors could target potential short-term pullbacks at about $955.61, or lower at $788.05, while $1,247 and $1,402 are crucial resistance zones.

The pullback could be an opportunity to buy

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In summary, although Tesla shares trade at steep valuation multiples, the stock offers exciting growth prospects, making it an ideal choice for investors willing to overlook the short-term turbulence.

Therefore, the recent pullback could be an opportunity to buy ahead of a potential rebound.

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