Why a bullish analyst is dragging his feet on his price target

You’re here (TSLA) will be a headline to watch when the electric vehicle maker releases its quarterly results on Wednesday after the market closes.

Analysts did some catching up as the stock exceeded past price targets following better-than-expected vehicle deliveries and speculation about inclusion in the S&P 500 (^GSPC) if it declares a profit for its last quarter.

Meanwhile, Oppenheimer analyst Colin Rusch maintains a price target of $ 968 on the electric vehicle maker. Tesla shares closed at $ 1,643 on Monday.

“The reason we drag our feet on the price target is really about earnings power, and that, ultimately, is determined by gross margins,” said Rusch, who has an outperformance rating on the action.

“What we’re looking for on Wednesday night is really some progress in the Shanghai plant and a demonstration that gross margins are holding up,” Rusch said.

The analyst says he will also pay attention to the company’s autonomous driving technology and the progress of its European giga-factory and its upcoming giga-factory for the Cybertruck.

The company logo shines on the grille of an unsold 2020 Model S sedan at a Tesla dealership on Sunday, July 19, 2020, in Littleton, Colo. (AP Photo / David Zalubowski)

“We see upside potential of 50% over our estimates for 2024,” Rusch said.

Tesla “has the potential to really disrupt the market in all major segments”

The company is currently the most valuable automaker in the world, worth almost $ 100 billion more than Toyota. Shares of the electric vehicle maker nearly touched $ 1,800 earlier this month.

“It makes sense if you believe in the disruptive nature of the technology and the disruptive nature of the platform,” Rusch said.

“As we see the market as a forward-looking entity, and I envision 4 to 5 years… Tesla may have the potential to really disrupt the market in all major segments. If we look at the light vehicle segment, as well as the heavy vehicle and last mile and middle mile delivery space. “

Cheaper gasoline prices at the pump won’t stop potential Tesla buyers from purchasing an electric vehicle, Rusch said.

“It’s like going to the grocery store and buying organic produce, or buying things for kids with natural materials,” Rusch said. “We think it’s really about consumers investing in what they want to see in the world and they’re certainly willing to pay extra for it.”