UBS upgraded Tesla to a Buy from Neutral while keeping its price target unchanged at $1,100.
Record-high order backlogs, increasing margins and a competitive edge in the supply chains of the electric-vehicle maker are reasons to be bullish on the company, analysts led by Patrick Hummel wrote in a June 9 note.
After falling more than 30% this year, Tesla (ticker: TSLA) shares are up 3% in premarket trading Thursday at $747.63.
“The operational outlook is stronger than ever before,” the UBS analysts said in a note titled “Time to be bold.”
UBS lowered its estimate for 2022 earnings per share by 12% because of the lockdowns, but raised its predictions for the next three years by up to 40%.
Tesla will probably deliver 1.4 million units this year despite that setback, meeting its target for 50% growth, UBS said. The company should also be able to expand faster and more profitably than rivals because its supply chain for semiconductors, battery cells and raw materials is superior.
“The market still underestimates how much better Tesla will fare versus competitors,” they said.
In a separate report, the company tripled production in its Shanghai plan in May and sold more than 30,000 cars in China last month. The company has been plagued by strict lockdowns in the country that have hampered output.