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On Thursday, Jefferies analyst Philippe Houchois maintained a Hold rating on Tesla stock (NASDAQ:TSLA) with a consistent price target of $300.00. Houchois noted Tesla’s significant profit and loss miss, attributing it to a decrease in automotive margins due to a 6% drop in average selling prices (ASP) compared to the previous quarter. According to InvestingPro data, Tesla currently trades at a P/E ratio of 96.8, suggesting a premium valuation relative to near-term earnings growth. The stock appears overvalued based on InvestingPro’s proprietary Fair Value model. Despite this, Tesla demonstrated a strong free cash flow (FCF) performance, which Houchois interpreted as aligning with the company’s strategic de-emphasis on its core automotive hardware business.
The analyst pointed out Tesla’s impressive ongoing reduction in unit cost of goods sold (COGS), which now stands at less than $35,000 per unit. Houchois also mentioned that there were no significant updates in Tesla’s business outlook. However, he highlighted the FCF beat and the reiteration of plans to introduce a new affordable model in the first half of 2025, the rollout of Full Self-Driving (FSD) capabilities, and the launch of the cybercab service in 2026 as factors that help alleviate concerns regarding Tesla’s subdued guidance for 2025.
Looking forward, Houchois suggests that these developments could help mitigate the impact of a less optimistic short-term outlook, setting the stage for what Tesla has described as an ’epic’ 2026 and ’ridiculously good’ 2027-28. Despite the challenges faced in the near term, Tesla’s reaffirmation of its upcoming product and service launches appears to be a central consideration in Jefferies’ current assessment of the electric vehicle manufacturer’s stock. With a market capitalization of $1.25 trillion, Tesla remains a dominant force in the automotive industry, though InvestingPro analysts expect net income to decrease this year.
In other recent news, Tesla has reported its Q4 and full-year 2024 financials, revealing an annual revenue of $97.15 billion. The company’s earnings call is anticipated to disclose its vehicle growth outlook for 2025 and targets for its Energy Generation and Storage business segment. Cantor Fitzgerald has maintained a Neutral rating and a $365.00 price target on Tesla’s stock. Meanwhile, Morgan Stanley (NYSE:MS) has reaffirmed its Overweight rating for Tesla, emphasizing the company’s potential in the growing field of embodied artificial intelligence.
Tesla has recently unveiled a new autonomous driving feature within its Fremont facility, marking a step towards Full Self-Driving capabilities. This feature is currently limited to a controlled environment within Tesla’s premises. In addition, the company is facing a complaint from the Union of Swedish Electricians over alleged unauthorized electrical work at its charging stations. Tesla, along with BMW (ETR:BMWG) and several Chinese manufacturers, is challenging the European Union’s tariffs on China-made electric vehicles. These are among the recent developments surrounding Tesla.
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