Tesla Receives PT Hike Amid Company’s Strength Ahead of Q2 Report

Stiefel initiated coverage of Tesla stock with a Buy rating and a $265 price target (PT). This implies an upside potential of approximately 45%. The firm noted Tesla’s strong position to deliver sustainable growth from 2025 to 2027 and beyond. This will be greatly facilitated by the development of Full Self-Driving (FSD) and the emergence of robotaxis.

However, the company’s near-term prospects are also strong, thanks to an update in its model lineup.

“In the near term, the revamped Model 3 and upcoming Model Y refresh should bolster sales, followed by the commencement of its next-generation vehicle (Model 2) production, which will likely garner very strong demand,” analysts wrote, according to the investing.com report.

“We also believe TSLA’s AI-based Full Self-Driving (FSD) initiative has the potential to generate significant value through sales of FSD, possible licensing agreements, and as a critical driver of longer-term RoboTaxi initiatives.”

Tesla has a very strong position both in the US and in the global market. Stifel’s confidence in the company’s future growth stems from its robust technology portfolio, global manufacturing footprint, and strong profitability. The firm also noted Tesla’s extensive global supply chain and domestic manufacturing as factors supporting cost advantages and margins.

One of the mentioned key components of Tesla’s growth is its Supercharger network. It ensures customer loyalty to the brand, growth in sales, and profitability.

Another element is Tesla’s artificial intelligence-based (AI) FSD technology. It can significantly benefit a company’s bottom-line growth. This includes FSD software sales, potential licensing agreements, and its critical role in Robotaxi’s long-term development.

Another important component is the energy generation and storage business. It is seen as a potentially significant growth driver.

Stiefel’s high price target for Tesla comes amid lower analyst expectations for the company’s Q2 2024 financials. Stiefel acknowledges short-term risks, such as potential barriers to electric vehicle adoption, uncertainty surrounding the US election, and others. However, the firm believes the recent downward revision in Tesla stock estimates by analysts is likely complete, which could remove the overhang on the stock.

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