Tesla will gain another 14% as company closes in on 500,000 annual deliveries, Wedbush says (TSLA)

Odd Andersen/AFP via Getty Images

• Strong third-quarter deliveries set Tesla up for a healthy earnings beat on Wednesday and a sales milestone before the year is out, Wedbush analysts said Friday.
• "Improved manufacturing efficiency and shining [Gigafactory] 3 success in China" are key drivers for the company's near-term success, the team wrote in note.
• The success abroad brings Tesla closer to hitting 500,000 deliveries in 2020, an achievement that was merely a "pipe dream" for the automaker and its peers just six months ago, Wedbush added.
• The analysts boosted their price target on Tesla shares to $500 from $475, implying a 13.7% climb from Friday's closing level over the next 12 months. 
• Watch Tesla trade live here.

With electric-vehicle demand rebounding from a mid-2020 slump, Tesla is on track to beat earnings expectations and reach a delivery milestone, Wedbush analysts said Sunday.

The automaker's third-quarter deliveries already came in above expectations, as sales of its Model 3 sedan driving the strong read. Tesla is slated to report its third-quarter earnings on Wednesday, and "improved manufacturing efficiency and shining [Gigafactory] 3 success in China" pave the road for a Street-beating report, the team wrote.

The analysts lifted their price target on Tesla shares to $500 from $475, implying a 13.7% climb from Friday's closing level over the next 12 months. Wedbush maintains a "neutral" rating on the shares.

Read more: Investment in the booming cybersecurity industry could be one of 'the first signs of recovery' – here's where five insiders say to place your bets in the fast-growing industry

The 139,300 deliveries seen last quarter also bring Tesla closer to the 500,000-delivery target this year. Pent-up demand in China and areas of robust sales in Europe are the key drivers for reaching the goal. The 500,000-delivery target marks "a line in the sand that was a pipe dream six months ago as Tesla (and other auto players) have navigated this unprecedented COVID backdrop," the analysts said. 

China in particular can "markedly increase" Tesla's profitability over the next few years as the country comes to represent more than 40% of the automaker's annual sales, Wedbush added. Positive earnings represent the "hearts and lungs" to bullish investors' hopes after years of quarterly losses.

With Model Y deliveries ramping up into the fourth quarter and China demand surging ahead, the automaker is set to turn its Wednesday earnings release into "another step forward" compared to its struggling peers, the team wrote.

Tesla closed at $439.67 per share on Friday, up 430% year-to-date.

Now read more markets coverage from Markets Insider and Business Insider:

'Not out of the woods': Here's what 5 top executives said this week about the prospect of more economic stimulus

The US federal deficit surges to record $3.1 trillion for 2020 amid unprecedented stimulus spending

An ex-Wall Street chief strategist lambasts 3 'nonsensical narratives' he says are pushing stocks to dangerous heights — and warns that the current rally is unsustainable

Markets Insider

NOW WATCH: How the suicide hotline saved my life

See Also:

• Jefferies says buy these 4 stocks likely to overperform because of the strong housing market
• Chewy cofounder Ryan Cohen lays out the crucial skills he learned from Warren Buffett and his father, and explains why he's all-in on Apple
• BlackRock invests over $100 million in UK electric bus-and-van maker Arrival, expanding push into greener transport