The Tesla stock experienced a significant surge last week following better-than-expected third-quarter earnings and positive guidance from CEO Elon Musk.
Most Wall Street analysts were optimistic about Tesla’s performance, with many maintaining buy ratings on the stock. However, not all analysts were convinced of its potential.
On Thursday, Bank of America reiterated its buy rating and raised its price target from $255 to $265 following the earnings report. By the end of trading on Friday, the stock had surpassed the new target, closing at $269.19 after a 3.3% increase from the previous day’s trading.
The strong Q3 earnings prompted Bank of America to revise its profit forecasts for 2024, 2025, and 2026. Analysts also pointed out positive factors mentioned during the earnings call, such as expected production growth of 20%-30% in the coming year, the potential launch of a new EV model, prospects for the autonomous Cybercab, enhancements in the Full Self Driving feature, cost reductions for the 4680 battery, and the possibility of increased sales of regulatory credits.
Bank of America concluded that Tesla is gearing up for future growth based on these factors.
When considering whether Tesla stock is a buy at this point, the bank’s analysts emphasized the company’s leadership in the EV market and its potential for success as demand grows. They also highlighted Tesla’s ability to self-fund and access cheap capital, which could drive further expansion.
Overall, Bank of America rated the stock as a Buy, citing Tesla’s growth prospects and recent positive developments as catalysts for near-term stock performance.
Morgan Stanley maintained its “top pick” designation for Tesla stock and upheld its $310 price target, focusing on the company’s projected 20%-30% volume growth.
Similarly, Wedbush reiterated its outperform rating on Tesla stock with a $300 price target, noting the growth forecast and improved margins.
On the other hand, analysts at JPMorgan rated Tesla stock as underweight and set a price target of $135, indicating a potential downside of nearly 50%.
JPMorgan cautioned that certain factors contributing to Tesla’s strong third-quarter earnings, such as regulatory credits, may not be sustainable in the long term. As competitors expand their electric vehicle offerings, they are likely to generate their own credits, reducing or eliminating the need for payments to Tesla.