Tesla stock surged Wednesday as a Wall Street analyst said the electric-car company has turned the corner on Model 3 production, with demand looking "very strong" into 2019 and beyond.
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Wedbush analyst Daniel Ives, in a research note to clients, said Tesla (TSLA) "is now poised to generate improved profitability and cash flow that put the risk of a capital raise in the background for now."
Ives reiterated his outperform rating on Tesla stock with a price target of 440, which is about 35% above where the stock currently trades.
"We believe the roadmap for European Model 3 delivery/shipments appears on schedule for the next few months as the window has now opened up for customers in a host of European countries to order Model 3's," he wrote.
Tesla stock jumped 10.4% to close at 326.09 on the stock market today.
Rough Year For Tesla Stock
Several notable events have contributed to a topsy-turvy year for Tesla stock. It hit a record high of 387.46 in August. That was in reaction to the tweet by Chief Executive Elon Musk about taking the company private at 420 a share. It later plunged on the response of the Securities and Exchange Commission. Then, following a strong third-quarter earnings report, the stock ultimately moved higher and briefly moved into a buy zone, then fell hard in the current stock market correction.
Tesla reports vehicle production numbers in early January and then fourth-quarter earnings in February.
Wall Street analysts are looking for revenue of $7.1 billion. That would be a 116% increase from the year-ago period and the second quarter in a row of triple-digit gains. Company revenue has grown by double- or triple-digit rates per quarter for more than four years.
The average estimate on adjusted earnings is $2.12 per share, vs. a loss of 3.04 in the year-ago quarter.
"We believe, based on U.S. consumer demand metrics and steady production with no major speed bumps/bottlenecks out of Fremont, that Tesla is poised to deliver a robust fourth quarter," Ives wrote. "That will be another major step forward for the company on its path to sustainable profitability and cash flow generation in 2019 on the heels of a transformational Model 3 growth opportunity for the coming years."
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The post Tesla Model 3 Demand, Profitability Look Strong Heading Into 2019 appeared first on Investor's Business Daily.
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