On Thursday, Guggenheim updated its stance on Tesla Inc. (NASDAQ:TSLA), raising the electric vehicle manufacturer's price target to $175 from the previous $156 while maintaining a Sell rating on the stock. Currently trading at $357.93 and near its 52-week high of $361.93, Tesla has shown remarkable momentum with a 104.5% surge over the past six months.
According to InvestingPro data, the stock appears overvalued based on its Fair Value analysis. The firm's analyst cited updated delivery and margin forecasts, along with a demand elasticity analysis, as the basis for the adjustment.
The analyst's projections now estimate Tesla's fourth-quarter deliveries to be around 491,000 vehicles, a slight decrease from the earlier forecast of 495,000, and below the current consensus. Despite expecting growth across all major regions, the data does not support the possibility of exceeding 500,000 deliveries for the quarter.
The revised auto gross margin expectation for the fourth quarter, excluding credits, is now 14.9%, compared to the 16.5% market consensus. InvestingPro analysis reveals Tesla's current gross profit margin stands at 18.23%, with 22 additional financial health indicators available to subscribers.
The demand elasticity analysis, which takes into account detailed pricing and promotions over the past two years, suggests that Tesla may face challenges in achieving its 20-30% volume growth target for 2024. The analyst believes that new models will need to drive the majority of growth in 2025.
The report also mentions that while technical factors could support Tesla's stock into the year-end, the likelihood of negative catalysts arising from delivery and earnings results, particularly after the stock's significant post-election rally, is high. The analyst expects that a cycle of negative revisions in the next one to three months could create favorable conditions for short positions in the near term.
In conclusion, while Guggenheim has increased the price target for Tesla, reflecting a higher implied value for the company's Full Self-Driving (FSD) features and a shift from a multiple-based valuation to a discounted cash flow (DCF) approach, the firm remains skeptical about Tesla's ability to meet its future growth targets and maintains a Sell rating on the stock.
With a current P/E ratio of 88.56 and a market capitalization of $1.15 trillion, Tesla remains one of the most closely watched stocks in the market. For deeper insights into Tesla's valuation and growth prospects, InvestingPro subscribers can access a comprehensive Pro Research Report, featuring detailed analysis and over 30 key financial metrics.
In other recent news, Tesla Inc. and JPMorgan Chase (NYSE:JPM) & Co. mutually agreed to drop their ongoing lawsuit, which was centered around a 2014 stock warrant transaction and a tweet from Tesla CEO Elon Musk. Details of any settlement reached were not disclosed. Meanwhile, Neuralink, led by Elon Musk, has been cited by the FDA for "objectionable conditions or practices" at its animal testing lab. The FDA has urged Neuralink to voluntarily correct the issues found, which did not compromise the safety of Neuralink's devices.
In the realm of financial analysis, BofA Securities upgraded Tesla's price target, maintaining a "Buy" rating, citing positive views on Tesla's ongoing development of its Optimus robot. Furthermore, Roth/MKM upgraded Tesla's stock from Neutral to Buy, driven by growing enthusiasm for electric vehicles and a favorable regulatory environment. However, Bernstein maintained its Underperform rating on Tesla, citing concerns over the company's strategic focus on the development of a dedicated 'Cybercab.'
In technology advancements, Tesla is actively testing Optimus in various scenarios, with a goal to produce 1,000 Optimus robots by the end of 2025, primarily for use in its own manufacturing facilities. The company's main artificial intelligence mission revolves around advanced driver-assistance systems, which are designed to function as smarter copilots.
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