The fundamental strength of Tesla should take another step forward in 2022, according to Piper Sandler. Analyst Alexander Potter raised his estimates for Tesla for 2022, saying the company's strong fourth-quarter deliveries signal a strong year ahead for the automaker. "We are boosting our estimates to reflect better-than-expected Q4 deliveries, as well as a higher estimate for deliveries in 2022 (we now expect 1.53M units, up from 1.38M previously). We're also nudging our 2022 margin expectations higher, because with strong volume and a rising contribution from software, we suspect Tesla will continue exceeding profitability expectations," Potter wrote. Changes to production methods and new factories in Texas and Germany should help Tesla better meet its strong demand from customers, Piper Sandler said. "Investors often ask us whether demand for competing EVs might sap Tesla's sales, but in our view, Tesla's market share is limited only by the company's own production capacity (and if 2022 goes as planned, capacity will soon get a big boost)," the note said. Piper Sandler has an overweight rating and a $1,300 price target for Tesla. That target is 26% above where the stock closed on Tuesday. Shares rose 1.2% in premarket trading Wednesday. However, the firm did not raise its price target despite the improved estimates, citing higher interest rates raising the cost of capital. Tesla is scheduled to release its fourth-quarter earnings on Jan. 26. -CNBC's Michael Bloom contributed to this report.
The logo of Tesla seen at one of its showroom.
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The fundamental strength of Tesla should take another step forward in 2022, according to Piper Sandler.