Analyst Baird Stays Bullish on Tesla with Outperform Rating and $260 Price Target
Rating and Price Target: Analyst Baird has reiterated an “Outperform” rating on the stock with a price target of $260.
Financial Performance: Despite a recent decline in automotive margins excluding credits and a shortfall in earnings primarily due to increased operational costs and restructuring expenses, Baird views this downturn as a favorable opportunity for investors to enter the market.
Sector Analysis: Baird acknowledges that automotive margins might continue to face challenges throughout the year. However, they highlight the strength in the Energy segment and anticipate that increased regulatory credits could mitigate these difficulties.
Strategic Outlook: Importantly, the analyst notes that the company’s timelines for unveiling its Robotaxi and next-generation vehicles remain on track. This reassurance alleviates concerns regarding potential delays in these critical projects.
Investment Recommendation: Given the upcoming Robotaxi event, Baird recommends investors consider buying the stock ahead of this anticipated milestone, suggesting potential upside associated with this future development.
Goldman Sachs has reduced its price target for Tesla, to $230 from $255. Despite this cut, the investment bank has kept its neutral rating on Tesla’s stock.
Cantor Fitzgerald downgraded Tesla to Neutral from Overweight, lowering the price target to $230 from $245 due to near-term valuation concerns.
Analyst’s View:
– Tesla is expected to gain from Full Self-Driving (FSD) technology, RoboTaxi potential, lower-priced models, global manufacturing, and extensive charging infrastructure.
– Anticipates long-term benefits from AI, software, and fleet-based profits.
– Encouraged by Elon Musk’s comments about OEM interest in licensing FSD, though details were not provided.
Optimus Robot: Tesla plans to start limited production of its Optimus robot by the end of 2024, with full-scale production and customer deliveries expected by 2026.
Valuation Concerns: Due to a 70% increase in TSLA’s share price over the past three months, the firm is adopting a more conservative near-term valuation stance.
Updated Estimates:
– Raised FY24 revenue estimate to $101.2 billion from $100.6 billion, driven by a boost in energy storage and deployment estimates.
– Projected energy storage and deployment revenue of approximately $9.6 billion, up from $6.6 billion.
– FY24 vehicle deliveries forecast at 1,824,000 units.
Valuation Methodology:
– 12-month price target is set using a 10-year bottom-up DCF approach.
– Applied a discount rate (WACC) of 11% and a long-term growth rate of 2%.
UBS forecasts a 20% decline in Tesla’s stock value, attributing this to the high level of AI potential already reflected in the stock price.
