Analysts revisit Tesla stock price targets as Q4…

Analysts revisit Tesla stock price targets as Q4 earnings loom

Tesla shares edged higher in early Friday trading as investors looked to claw back some of the losses tied to its disappointing delivery figures while adjusting to price target changes from Wall Street analysts.

Tesla (TSLA) shares, one of the market's top post-election performers, slumped more than 6% yesterday after it posted its first-ever annual sales decline even as it recorded record deliveries of just under 496,000 cars for the three months ended in December.

The overall tally missed Wall Street's more-bullish forecasts and underscored the headwinds facing Tesla's legacy automaking business as EV demand stalls and global competition intensifies in the legacy business that still generates the bulk of its profit.

The group did report Friday that China sales rose 8.8% on the year to a record 657,000 units, although exports to markets in Europe and elsewhere from its Shanghai gigafactory were down 24%.

Tesla CEO Elon Musk has said his company can grow vehicle deliveries 20% to 30% this year.
Image source&colon; TheStreet

Tesla CEO Elon Musk, however, continues to stress that Tesla's longer-term prospects are more aligned to his ambitions for AI technologies, cybertaxis, energy storage and robotics than legacy carmaking.

Tesla's 'generational' opportunities

Musk says the group will produce as many as 2 million autonomous Cybercabs a year by 2026. He insists that a "20% to 30% vehicle growth next year" is likely, absent "some force majeure events, like some big war breaks out or interest rates go sky high or something like that."

Canaccord Genuity analyst George Gianarikas, who raised his price target on Tesla stock by $106 to $404 a share after last night's delivery miss, is also focused on the group's longer-term prospects.

"Tesla also has a generational set of growth opportunities ahead, including EVs, autonomy/AI, energy storage, and robotics," he said. "We acknowledge the limited upside implied by our price target but believe it is appropriate given the near-term volatility."

Energy storage, in fact, was one of the underreported aspects of Tesla's Q4 delivery report. The group said that division, which focuses on residential and commercial markets with its Powerwall and Megapack offerings, saw growth more than triple (up 244%) last quarter with a record deployment of 11 gigawatt hours.

Over the whole of 2024, Tesla's energy-storage deployment more than doubled to 31.5 GWh.

Tesla energy storage a 'bottom line driver'

CFRA analyst Garrett Nelson, who trimmed his Tesla stock price target by $30 to $530 a share after yesterday's delivery figures, said energy storage would be a "bottom-line driver for Q4 given the segment's relatively strong margins."

Tesla is scheduled to report fourth-quarter earnings after the close of trading Jan. 29. Wall Street is looking for a bottom line of 72 cents a share on revenue of $27.23 billion. Gross margin, meanwhile, is forecast to widen modestly to 18.85%, according to LSEG data.

"We recommend buying the dip, as we expect 2025 to be a year of positive developments related to a federal autonomous driving framework, which we expect to drive multiple expansion, more than offsetting concerns regarding slowing sales growth," Garrett said.

Deepwater Asset Management analyst Gene Munster, a longtime Tesla bull, thinks investors will be sharply focused on Tesla's fourth-quarter profit margins as well as its broader outlook for growth and demand.

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"While Elon is focusing investors on autonomy, EVs still matter, given [that] those cars are the foundation of autonomy," he said. "So besides the usual focus on margins, investors will be listening for updates to Musk delivery expectations for 2025."

Tesla shares were marked 0.14% higher in early Friday trading to indicate an opening-bell price of $379.80 each.

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