Even with an 8% loss over the past month, electric vehicle giant Tesla (NASDAQ:TSLA) is up a staggering 51.48% year-to-date.
A run like that for any mega-cap stock might imply that future upside is limited, but when it comes to Tesla, some analysts don’t see it that way, meaning that good tidings could be on the way for exchange traded funds, including the ARK Autonomous Technology & Robotics ETF (CBOE: ARKQ).
In a note to clients on Wednesday, New Street Research analyst Pierre Ferragu boosted his Tesla price target to $1,580 from $1,298. Ferragu, long a Tesla bull, now has the highest Tesla price target on Wall Street, and with a margin of $95 at that. Ferragu’s new price objective implies upside of more than 38% from the December 8 close and that Tesla will ascend to a market capitalization of $1.6 trillion.
Although the consensus price target for Tesla is up $50 over the past month, it’s still just $830 — not only a far cry from Ferragu’s forecast, but also well below where the shares closed on Wednesday. Nearly half of the analysts that cover Elon Musk’s company have “buy” ratings on the shares.
“Still, ‘multiple strong catalysts; in 2022 can drive shares higher in coming months, wrote Ferragu in his Wednesday report. Those include: an upside fourth quarter, strong production from Tesla’s Shanghai facility, new production capacity coming online in Germany and Texas, and new batteries for Tesla EVs,” reports Al Root for Barron’s.
Should those expectations morph into realities, ARKQ stands to benefit. The actively managed fund allocates 11.35% of its weight to Tesla, as of December 8. That’s 405 basis points more than it devotes to its second-largest component, and that makes ARKQ one of the largest ETF owners of Tesla shares.
Translation: ARKQ can be an ideal ETF proxy for Tesla. Indeed, among ETFs, ARKQ is levered to goings-on at Tesla, and that could be a positive if delivery and profitability metrics are met and exceeded.
“For the fourth quarter, Ferragu expects Tesla to deliver about 283,000 vehicles. Wall Street projects about 266,000. What’s more, Ferragu expects about 1.5 million vehicles sold for Tesla in 2022. Current Wall Street estimates for 2022 deliveries range from about 1.3 million to 1.4 million units,” according to Barron’s.
ARKQ is higher by 3% over the past week.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.