(Reuters) – Tesla’s <TSLA.O> stock extended its recent rally on Wednesday following a surge in China car registrations and after Goldman Sachs initiated coverage of the electric car maker with a “buy” recommendation.
Shares of the Silicon Valley automaker rose nearly 2%, bringing their gain this week to 26% as traders look beyond the short-term impact of the coronavirus pandemic, which has forced Tesla to close its California factory, furlough workers and cut salaries.
Tesla’s China car registrations jumped 450% in March, month on month, data from auto consultancy LMC Automotive showed. Overall auto sales in China plunged 43.4% in March, as a coronavirus pandemic continued to depress demand.
In a note late on Tuesday, Goldman Sachs analyst Mark Delaney started coverage of Tesla with a $864 price target, compared to its latest price of $723.
“We believe that the combination of Tesla’s product leadership (including its over-the-air updates to continue to improve vehicle performance), brand/early-mover advantage, vertical integration, and the long development cycles in autos (new cars can take 2-4 years to develop) will help Tesla to maintain a strong market position,” Delaney wrote.
Wall Street has long been divided over Tesla and its chief executive, Elon Musk. Supporters expect Tesla to become a dominant global car maker, with a fleet of driverless taxis, while many skeptics doubt Tesla can become sustainably profitable.
Goldman Sachs’ previous Tesla analyst, David Tamberrino, had a “sell” rating and a $158 price target as of last June, the lowest on the street at that time.
Previously, in 2016, Goldman Sachs attracted attention when it upgraded Tesla to “buy” just hours before the car maker announced a $2 billion stock offer with Goldman Sachs and Morgan Stanley acting as joint lead bookrunners.
Tesla’s stock has doubled from its March low and remains down 20% from its record high close in February, before fears about the impact of the coronavirus on the global economy triggered a deep stock market sell-off.
(Reporting by Noel Randewich; Editing by Chris Reese)