Mizuho Securities analyst Vijay Rakesh upgraded Tesla (TSLA) stock to a Buy view from Hold, while also more than doubling the price target to $515 (11.2% upside) from $230. Rakesh has turned highly bullish on Tesla’s growth potential in the coming four years under President-elect Donald Trump’s leadership. CEO Elon Musk’s close ties with Trump could bring huge benefits for the EV maker. The five-star analyst’s new price target reflects a 15.5x forecasted P/S (price-to-sales) multiple for Fiscal 2025.
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Interestingly, Rakesh noted the short-term noise from the EU (European Union) tariff challenges and the repeal of EV Credits that could emerge under Trump’s administration. Despite these potential headwinds, Rakesh believes that three major catalysts are poised to boost Tesla’s performance in the years to follow.
Three Catalysts for Tesla’s Potential Growth
- Favorable Autonomous Driving Regulations – The analyst expects favorable and easing regulations for the autonomous driving space under Trump’s administration to ensure faster on-road mobility of both passenger vehicles and robotaxis. Telsa’s FSD (full self-driving) tech is set to win approval by 2025 in the U.S. Rakesh forecasts 8.5 million autonomous vehicles by 2030, boosting the autonomous segment revenue to roughly $62 billion from less than $1 billion today. Furthermore, the analyst expects a ramp in Tesla’s Humanoid robots to 7.2 million units by 2040, with $166 billion in revenues. Overall, the analyst estimates Tesla’s Autonomy segment to contribute $311 per share of the total price target.
- Repeal of EV Tax Credits Could Benefit Tesla – Rakesh noted that the EV tax credit repeal would take effect by 2025-26. This would, in turn, benefit Tesla as it has one of the best production margins compared to its peers. Additionally, Musk’s close ties with and influence on Trump’s internal regulatory decisions could prove a big boon for Tesla’s business.
- More Profitable EV Roadmap – Rakesh points out that Tesla is on track to launch a budget-friendly EV in 2025, called Model Q. This could pump up demand for the company’s EVs, resulting in enhanced auto production in 2026-27. Also, Tesla’s Cybercab should hit the roads next year, boosting the company’s production and sales potential.
Overall, Rakesh’s SOTP (sum of the parts) valuation results in a $515 price target for Tesla.
Is Tesla Stock Good to Buy?
The electric vehicle (EV) maker seems to be winning analysts’ favor ever since Trump won the Presidential elections this year. On Friday, Wedbush Securities analyst Daniel Ives also raised Tesla’s price target to an impressive range of between $515 and $650. Tesla shares have been on an upswing since November 5, skyrocketing roughly over 90%.
On TipRanks, TSLA stock currently has a Hold consensus rating based on 13 Buys, 12 Holds, and nine Sell ratings. The average Tesla stock price target of $287.10 implies nearly 38% downside potential from current levels.
