Bank of America just raised its EUR/USD forecast
On Wednesday, Baird analysts adjusted their outlook on Tesla stock (NASDAQ:TSLA), lowering the price target to $320 from the previous $370 while maintaining an Outperform rating. With Tesla currently trading at $238 and sporting a market capitalization of $765 billion, the firm recognized several challenges facing the electric vehicle manufacturer that could pressure the stock in the near term. According to InvestingPro data, 12 analysts have recently revised their earnings expectations downward for the upcoming period.
The analyst at Baird cited a variety of headwinds, including the ramp-up of the new Model Y, which is affecting profit margins, and concerns about potential brand deterioration. These concerns appear justified, as InvestingPro data shows Tesla’s gross profit margin at 17.86%, reflecting operational challenges. These issues were not adequately addressed in a recent call, according to the analyst. Additionally, disruptions in the global supply chains impacting both the automotive and energy segments of Tesla’s business were identified as immediate obstacles.
Despite these short-term concerns, Baird’s analyst remains optimistic about Tesla’s mid-term prospects. The firm anticipates several potential catalysts that could enhance the stock’s performance. Among these are the anticipated launch of robotaxi operations in Austin, the introduction of a new vehicle model, and forthcoming updates on the progress of Optimus. The analyst expects that these developments, including the prospect of higher volume production of Optimus, could significantly boost Tesla’s share value.
The analyst’s statement highlighted the balance between acknowledging the near-term difficulties and the potential for significant growth driven by Tesla’s upcoming initiatives. "Maintaining Outperform rating while acknowledging the challenging backdrop and downside bias near-term," the analyst commented. They further elaborated on the longer-term view, stating, "Looking to the intermediate-term, several catalysts [...] could drive shares meaningfully higher."
Tesla’s stock performance will continue to be closely watched as the company navigates through the mentioned challenges while pushing forward with its strategic plans in the evolving electric vehicle market. With a P/E ratio of 106 and annual revenue of $97.69 billion, Tesla’s valuation metrics suggest high growth expectations despite current headwinds. For deeper insights into Tesla’s valuation and over 20 additional key metrics, explore the comprehensive research available on InvestingPro, where you’ll find exclusive analysis and Fair Value assessments for over 1,400 stocks.
In other recent news, Tesla reported its first-quarter earnings for 2025, which fell short of Wall Street’s expectations. The company posted revenue of $19.34 billion and earnings per share of $0.27, both missing the consensus estimates of $21.4 billion and $0.44, respectively. This underperformance led Mizuho (NYSE:MFG) Securities to lower its price target for Tesla stock from $375 to $325, although they maintained an Outperform rating. Similarly, TD Cowen adjusted their price target from $388 to $330, while keeping a Buy rating, citing a "better-than-feared" quarter. Tesla’s automotive gross margins were slightly above consensus, but the company faced a 13% year-over-year decline in deliveries, partly due to production downtime for Model Y retooling.
Despite these challenges, Tesla remains committed to its ambitious projects, including the anticipated launch of its RoboTaxi service in June and advancements in Full Self-Driving capabilities. The company is also progressing on more affordable vehicle models, with production expected to begin in the first half of 2025. Additionally, Tesla’s energy storage business achieved record gross profit, highlighting a bright spot amid the mixed results. Analysts from TD Cowen noted Tesla’s resilience in maintaining auto decremental margins at 16%, reflecting the company’s adaptability in a challenging economic environment.
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