Top analyst reworks Tesla stock price, rating with Q4 earnings on deck
Tesla moved lower in early Tuesday trading after a top Wall Street analyst issued a bullish note on the electric-vehicle group's near-term prospects but added a dash of caution tied to the risks it faces in achieving its broader ambitions.
Tesla ( TSLA ) shares surged more than 60% from the November elections to the end of the year on bets that CEO Elon Musk's close ties with President-elect Donald Trump might result in favorable policies. This year the stock has been largely muted.
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The group posted modestly weaker-than-expected fourth-quarter-delivery figures last week, which included a record end-December rally. But the report also reflected Tesla's first overall annual-sales decline despite solid gains in China and price cuts in major markets worldwide.
On the plus side, Tesla also deployed a record 11 gigawatt hours of energy storage over the fourth quarter, a 244% increase from the year-earlier period that took its 2024 total to another all-time high of 31.5 GWh.
The group is slated to post its detailed fourth-quarter earnings after the close of trading on Jan. 29, with analysts looking for a bottom line of 72 cents a share on revenue of $27.23 billion. Gross profit margins, meanwhile, are forecast to widen modestly to 18.85%, according to LSEG data.
Bank of America sees Tesla execution risk
Investors are likely to focus on the group's robotaxi rollout, its plans for a low-priced EV that could be launched later in the year, and the ramp of its Optmus robotics platform.
Bank of America analyst John Murphy argues, however, that Tesla's post-election rally pegs the stock at a level that "captures much of our base-case long-term potential from core autos, robotaxi, Optimus, and energy generation and storage."
Related: Analysts revisit Tesla stock price targets as Q4 earnings loom
Murphy downgraded Tesla to neutral from buy in a note published Tuesday, citing execution risks for the group's broader ambitions, but he boosted his price target by $90 to $490 a share to allow for last year's rally.
"Since our upgrade in April 2024, news flow and investor sentiment have shifted more positively," Murphy and his team wrote. "Catalysts around future growth drivers have been more fully recognized (most notably for robotaxi)."
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Murphy listed a number of catalysts that could support the share price over the next 12 months. But he added a caveat to the market's base case, saying new policy initiatives from the Trump administration may be "less favorable for Tesla than expected."
Robotaxis key to Tesla outlook
As a factor supporting the stock's upside potential, he cited the likely introduction of a lower-priced EV later this year â a move Musk has said would be "pointless" unless it was designed to be fully autonomous â as well as the launch of the group's new robotaxi.
"With this sizable cost advantage, Teslaâs robotaxi service could offer rides at a much lower price to the consumer and still have higher margins,â Murphy and his team wrote.
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Murphy also sees catalysts from the energy-storage business and the ramp of production at its Shanghai gigafactory, as well as updates on Full-Self-Driving technologies that are planned for rollout in major markets in coming months.
He added that a "potential capital raise, which could help accelerate growth," is another potential share-price driver.
Tesla shares were marked 1.72% lower in premarket trading to indicate an opening bell price of $404.02 each.
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