Tesla stock soared this past week after third-quarter earnings beat forecasts and CEO Elon Musk gave upbeat guidance.
Wall Street analysts largely had positive reviews with several maintaining buy ratings on Tesla stock, though not everyone was convinced.
Early Thursday, the morning after the earnings report, Bank of America reiterated its buy rating and lifted its price target to $265 from $255. By the market close on Friday, shares had already blown past that higher view, finishing up 3.3% at $269.19 after soaring 22% in the prior trading session.
Still, the Q3 earnings numbers were so strong that BofA also boosted its profit forecasts for full-year 2024 as well as 2025 and 2026. Analysts also highlighted the bullish comments on the earnings call, such as production growth of 20% to 30% next year (presumably backed by a new EV model), prospects for the autonomous Cybercab, improvements in the Full Self-Driving (FSD) assistance feature, lower costs for the 4680 battery, and upside potential for sales of regulatory credits.
“The bottom line was that Tesla is charging up for the next wave of growth,” BofA wrote.
So is Tesla stock a buy now?
Summing up their investment thesis, the bank’s analysts said the company is a trailblazer in EVs and could be successful as demand increases over time, while its self-funding status and access to cheap capital should power more growth.
“TSLA has revitalized the growth narrative with both commentary and results that work as a catalyst for the stock in the near term, such as the August Robotaxi event, new product launch by early 2025, and potential licensing of FSD,” they added. “Therefore, we rate the stock Buy.”
At Morgan Stanley, analysts kept their “top pick” designation on Tesla stock and backed their $310 price target, with a focus on the company’s forecast for 20% to 30% volume growth.
Similarly, Wedbush reiterated an outperform rating on Tesla stock and a $300 price target as analyst Dan Ives also flagged the growth forecast and wider margins.
But analysts at JPMorgan rated Tesla stock at underweight and set a price target of $135, implying downside of nearly 50%.
The bank warned that some catalysts of strong earnings in the third quarter, such as regulatory credits sold to companies that don’t meet emissions requirements, are unsustainable over the long term.
“As other automakers broaden their electric offerings, they should, over time, be in a position to generate their own credits, negating and eventually eliminating the flow of competitor payments to Tesla,” it said.
