Piper Sandler has adjusted its outlook on Tesla Inc (NASDAQ: NASDAQ:TSLA), increasing the electric vehicle manufacturer's price target from $300 to $310, while maintaining an Overweight rating on the stock.
The firm attributes this adjustment to an upward revision in vehicle delivery estimates for the third quarter and full year 2024 after reviewing intra-quarter sales data.
In the third quarter, Piper Sandler now anticipates Tesla to reach nearly 459,000 deliveries, which would mark a quarter-over-quarter increase of 3.3% and a year-over-year growth of 5.4%. The firm's new full-year delivery estimate for Tesla is approximately 1.75 million units, up by about 23,500 from their previous forecast.
According to the analyst, China is on track to record its strongest quarter for Tesla, and despite weaker sales in Europe, the anticipated deliveries of the Cybertruck are bolstering demand in the United States.
The firm's updated price target is supported by a discounted cash flow (DCF) model, which now assumes a lower weighted average cost of capital (WACC) of 13.3%, down from 13.5%. The reduction in WACC is a reflection of the declining treasury yields.
In other recent news, Tesla anticipates a robust third-quarter delivery report, with Baird and RBC Capital maintaining their Outperform ratings, and projecting deliveries at approximately 480,000 and 460,000 units, respectively.
Both firms highlight strong market indicators for the electric vehicle maker, including China insurance registrations and third-party data. Elon Musk, Tesla's CEO, is also exploring investment opportunities in Argentina, a significant global lithium producer.
Meanwhile, Goldman Sachs and BofA Securities, maintaining their Neutral and Buy ratings respectively, underscore the potential impact of Tesla's upcoming robotaxi reveal. The Biden administration's proposed ban on Chinese connected-car technology could potentially influence Tesla's operations in China.
InvestingPro Insights
As Tesla Inc (NASDAQ:TSLA) continues to navigate the dynamic electric vehicle market, real-time data from InvestingPro provides additional context for investors monitoring the company's performance. Tesla's market capitalization stands at a robust $811.22 billion, reflecting investor confidence and the company's industry stature. Despite a high P/E ratio of 65.04, which suggests a premium valuation, Tesla has demonstrated significant returns over recent periods, with a 1-week price total return of 11.91% and a 3-month price total return of 35.72%. These figures highlight the stock's recent positive momentum, aligning with Piper Sandler's optimistic outlook.
InvestingPro Tips further enrich our understanding of Tesla's financial health and market position. Notably, Tesla holds more cash than debt on its balance sheet, providing financial flexibility and resilience. Moreover, Tesla's liquid assets exceed its short-term obligations, indicating a strong liquidity position that can support ongoing operations and investments. These insights, among others available on InvestingPro, provide investors with a comprehensive view of Tesla's financial standing and market potential. For those seeking a deeper dive into Tesla's performance and future outlook, additional InvestingPro Tips can be found on the platform.
Investors considering Tesla's stock should weigh these metrics and tips alongside Piper Sandler's analysis to form a well-rounded perspective on the company's prospects. With a total of 22 InvestingPro Tips available, including insights into valuation multiples and profitability predictions, the InvestingPro platform offers a valuable resource for those looking to make informed investment decisions regarding Tesla.
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