Tesla’s stock experienced a significant surge this past week following impressive third-quarter earnings that exceeded expectations, coupled with optimistic guidance from CEO Elon Musk.
Wall Street analysts responded favorably to the earnings report, with many reiterating their buy ratings on Tesla shares, although opinions varied among experts.
On Thursday morning, following the earnings announcement, Bank of America reaffirmed its buy rating and raised its price target for Tesla from $255 to $265. By Friday’s market close, the stock had surpassed this new target, climbing 3.3% to $269.19 after a remarkable 22% jump in the previous trading session.
The strength of Tesla’s Q3 earnings prompted Bank of America to revise its profit forecasts for the full years of 2024, 2025, and 2026. Analysts highlighted encouraging comments made during the earnings call, including expectations for 20%-30% production growth next year—likely supported by the introduction of a new electric vehicle model. Additionally, the potential rollout of the autonomous Cybercab, enhancements to the Full Self-Driving (FSD) feature, reduced costs associated with the 4680 battery, and an increase in sales of regulatory credits were all cited as positive indicators.
“The bottom line is that Tesla is gearing up for its next growth wave,” BofA stated in its analysis.
So, is now the right time to buy Tesla stock?
Summarizing their investment perspective, Bank of America’s analysts noted that Tesla remains a leader in the electric vehicle market and is well-positioned for future demand growth. They emphasized the company’s self-funding ability and access to affordable capital, which should facilitate further expansion.
“TSLA has rejuvenated its growth narrative with both its commentary and results acting as catalysts for near-term stock performance, such as the August Robotaxi event, the new product launch expected by early 2025, and potential licensing opportunities for FSD,” they concluded, endorsing a buy rating.
Morgan Stanley also retained its “top pick” status for Tesla and maintained a price target of $310, focusing on the company’s projected 20%-30% volume growth.
Similarly, Wedbush reaffirmed its outperform rating and set a $300 price target, with analyst Dan Ives highlighting the company’s growth forecasts and expanding profit margins.
Conversely, analysts at JPMorgan took a more cautious stance, assigning Tesla an underweight rating and setting a price target of $135, suggesting a nearly 50% downside. They cautioned that some factors contributing to the strong Q3 earnings, such as the sale of regulatory credits to non-compliant companies, may not be sustainable in the long run.
“As other automakers expand their electric vehicle offerings, they are likely to generate their own regulatory credits over time, which could diminish and eventually eliminate the revenue stream from competitor payments to Tesla,” JPMorgan warned.
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