Tesla will leap 12% from current levels as pent-up demand drives Chinese market domination, Wedbush says

• The Wedbush analyst Dan Ives raised his price target for Tesla shares to $475 from $380 on Thursday, citing stronger-than-expected deliveries in China.
• The new target implies a 12% gain from the automaker's Thursday closing price of $423.43.
• China is a "key market" for Tesla that could make up 40% of global sales as early as 2022, Ives said.
• The analyst also cited the automaker's Battery Day next Tuesday as a "linchpin event" for his higher valuation target.
• Watch Tesla trade live here.

Tesla deliveries in China are tracking higher than anticipated over the third quarter, leading Wedbush to lift its price target for the electric-car maker.

The analyst Dan Ives raised the firm's target to $475 from $380 on Thursday, implying a 12% rally from the company's closing price of $423.43. China is a "key market" for Tesla moving forward, Ives said, as the automaker's Gigafactory in Shanghai stands to raise Model 3 margins above those in the US and Europe.

"Pent-up demand" and recent price cuts are fueling "increased market share vs domestic competitors as the Giga 3 success story continues to play out," the analyst added.

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Ives maintained a "neutral" rating on the shares.

Wedbush said it sees "clear momentum" for Tesla sales in China through the rest of the year. The firm raised its third-quarter deliveries estimate accordingly, to 130,000 vehicles from 124,000. The new target would mark a 34% improvement from the year-ago period and set Tesla up to reach 470,000 total deliveries in 2020.

Ives also projected that China deliveries would make up 40% of Tesla's order book as early as 2022.

For investors seeking a near-term boost to the automaker's share price, Tesla's Battery Day next Tuesday will be a "linchpin event" for a loftier valuation, Wedbush said. The company is expected to unveil new battery-cell technology and a power unit able to drive for 1 million miles.

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The new cells are also set to reduce production costs; doing so "would give Tesla much more financial flexibility" to price its models competitively with legacy automakers, Ives said.

Tesla closed at $423.43 per share on Thursday, up 406% year-to-date.

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