Tesla shares close lower on Friday, stock price target raised at Piper Sandler on growth potential in China

Piper Sandler maintained its “Overweight” rating on Tesla Inc (TSLA) and bolstered its 12-month price target on the stock from $423 to $553. The firm said Tesla’s potential for growth in China had been underestimated by the market even after TSLA’s recent rally.

Tesla shares closed lower for a second consecutive trading session on NASDAQ on Friday. The stock went down 0.66% ($3.19) to $478.15, after touching an intraday high at $484.90 and an intraday low at $474.12.

Shares of Tesla Inc have risen 14.30% so far in 2020 compared with a 2.67% gain for the benchmark index, Nasdaq 100 (NDX).

In 2019, Tesla’s stock went up 25.70%, thus, it underperformed the Nasdaq 100, which registered a 37.96% gain.

Piper’s analysis of China’s vehicle registration data revealed sales of Tesla’s Model 3 sedans had surged 19% during the last three months.

“If Tesla’s Model 3 market share in the U.S. can be replicated in China – and if this logic extends also to Model Y – then Tesla’s annual volume in China alone would eventually exceed 650K units,” Piper Sandler analyst Alexander Potter wrote in a note to clients, cited by CNBC.

“We’re not sure Tesla can immediately replicate its U.S. success in China (due to the strength of German brands in China), but we are increasing our estimates nonetheless,” Potter noted.

The firm expects Tesla to deliver 112 000 vehicles in China in 2020, 225 000 vehicles in 2021 and 399 000 vehicles in 2022.

Analyst stock price forecast and recommendation

According to CNN Money, the 29 analysts, offering 12-month forecasts regarding Tesla Inc’s stock price, have a median target of $340.00, with a high estimate of $734.00 and a low estimate of $200.00. The median estimate represents a 28.89% downside compared to the closing price of $478.15 on January 10th.

The same media also reported that at least 11 out of 32 surveyed investment analysts had rated Tesla Inc’s stock as “Hold”, while 10 – as “Buy”. On the other hand, 9 analysts had recommended selling the stock.