Bank of America analysts increased their price target for Tesla (NASDAQ:TSLA) stock to $350, up from the previous $265, following the recent U.S. election outcome.
The firm maintains a "Buy" rating on the electric vehicle (EV) manufacturer's shares, citing potential regulatory benefits under the Trump administration.
"Our analysis has shown that TSLA should be relatively indifferent directly to most policies discussed in our recent election note, but may benefit from a shift to a federal regulation of autonomous vehicles/full self-driving (FSD) nationwide," analyst John Murphy said in a note to clients.
"In addition, it is difficult to judge how Elon Musk’s increasingly close public relationship with President Trump could benefit Tesla, but this needs to be monitored closely.
We believe these factors, and potentially others, should support TSLA’s growth trajectory and thereby the higher earnings multiple."
The updated valuation now assumes a 10x EV/Sales multiple, a rise from the previous 8x, with the valuation horizon extended to 2026.
The Biden administration has initiated several investigations into Tesla's FSD system, and there is an expectation of less aggressive scrutiny under Trump's leadership.
Elon Musk has advocated for a national standard for self-driving vehicle regulation, which the Trump administration appears willing to consider.
According to BofA, this could facilitate the deployment of Tesla's Robotaxi service, slated for launch in 2025, which currently requires individual state approvals.
Moreover, President-elect Trump's inclination to ease environmental regulations may reduce the urgency for incumbent automakers to transition from internal combustion engine vehicles to EVs.
This scenario could enable Tesla to strengthen its dominance in the U.S. EV market, particularly as it plans to introduce new, more affordably priced models.
Also, a tougher stance on China by the Trump administration may limit the entry of potential Tesla competitors into the U.S. EV market.