On Tuesday, Canaccord Genuity showed confidence in Tesla Inc (NASDAQ:TSLA) by raising its stock price target to $254 from $222, while maintaining a Buy rating on the stock. The firm's optimism is partly due to the potential of Tesla's Full Self-Driving (FSD) feature, which has recently been offered to customers through a one-month free trial and at reduced prices.
The analyst from Canaccord Genuity highlighted the upcoming earnings report set for July 23rd as a significant event, which is expected to provide insights into Tesla's margin results, possible new vehicle announcements, and energy storage updates.
The focal point of interest, however, is the customer adoption rate of Tesla's FSD feature. The firm is eager to learn about the current customer traction, especially considering Tesla's strong emphasis on autonomy and the forthcoming Robotaxi day, which could reveal more about the company's direction and the feature's impact on margins.
The firm's increased estimates are driven by higher expectations for Tesla's energy storage growth and margins. The non-GAAP EPS estimate for 2026 has been adjusted from $8.55 to $9.06. The price target adjustment to $254 reflects a change in the earnings multiple from approximately 26 times to 28 times the firm's 2026 estimated non-GAAP EPS.
This change signifies Canaccord Genuity's heightened conviction in Tesla's growth potential and emerging opportunities, such as the Optimus project, which could serve as additional growth drivers for the company.
In other recent news, Tesla has reported surpassing second-quarter vehicle delivery predictions, with a total of 443,956 units delivered, a 14.8% rise from the first quarter. This performance is attributed to pricing adjustments that spurred customer demand.
Still, Tesla's sales of electric vehicles manufactured in China experienced a 24.2% decline year-over-year in June. Meanwhile, BYD (SZ:002594), a Chinese automaker, reported a substantial 21% increase in its EV sales for the second quarter, signaling a tightening race with Tesla.
In contrast, Polestar (NASDAQ:PSNY) reported a first-quarter operating loss of $231.7 million due to significant tariffs on its China-produced EVs. The company is planning measures to mitigate these impacts, including adjusting its production strategy to lessen its dependency on Chinese manufacturing.
Citi maintains a neutral stance on Tesla stock, following the company's Q2 vehicle deliveries and production numbers, which surpassed consensus expectations. These are recent developments in the EV sector.
InvestingPro Insights
As Tesla gears up for its upcoming earnings report, investors are keenly observing the company's financial health and growth prospects. According to InvestingPro data, Tesla's current market capitalization stands at an impressive $730.26 billion, with a Price/Earnings (P/E) ratio of 53.29.
This high P/E ratio suggests that investors are expecting substantial earnings growth in the future. Moreover, the company has achieved a revenue growth of 10.12% over the last twelve months as of Q1 2024, which underlines Tesla's continued expansion in the highly competitive automotive sector.
On the performance front, Tesla has demonstrated a strong return over the last week, with a price total return of 12.01%. This short-term surge reflects investor optimism, possibly influenced by Tesla's strategic moves such as the promotion of its Full Self-Driving feature. An InvestingPro Tip also highlights that Tesla holds more cash than debt on its balance sheet, indicating a solid financial position that could support its ambitious growth plans and technological advancements.
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