The market is underestimating Tesla's growth potential in China even after the recent swift rally, Piper Sandler said.
The research firm hiked its price target on the electric carmaker to $553 from $423, a 30% increase that would translate into a 15% gain from here. Piper's new forecast is based on its analysis of China's vehicle registration data, which showed big upside in the emerging market.
"If Tesla's Model 3 market share in the United States 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," analyst Alexander Potter said in a note on Thursday.
China's vehicle registration data showed a 19% jump in sales of Tesla Model 3 in the last three months, Piper said.
Shares of Tesla have doubled in just three months, soaring 96% to $481.34 on Thursday. Tesla recently launched the Model Y in China and started delivering the first Tesla Model 3 cars out of the new Gigafactory in Shanghai.
