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On Thursday, Truist Securities adjusted its stance on Tesla stock (NASDAQ:TSLA), increasing the price target to $373 from the previous $351, while continuing to recommend a Hold position on the shares. The adjustment reflects a cautious optimism from the firm, despite acknowledging certain shortcomings in the electric vehicle maker’s recent performance and future outlook disclosures. With a current market capitalization of $1.25 trillion and a P/E ratio of 96.84, Tesla trades at premium multiples compared to its peers. According to InvestingPro analysis, the stock is currently trading above its Fair Value.
In the fourth quarter, Tesla’s average selling price (ASP) weakness was a significant factor that led to revenues, gross profit margin (GPM), operating profit margin (OPM), and earnings per share (EPS) falling below the consensus estimates. InvestingPro data reveals that Tesla’s gross profit margin stands at 18.23%, with 10 analysts recently revising their earnings expectations downward. Truist Securities analyst William Stein pointed out that while Tesla’s CEO Elon Musk has been vocal about the company’s potential for a massive market capitalization through leadership in autonomy, there was a notable lack of detail regarding new vehicle plans for 2025 and milestones for artificial intelligence achievements, particularly Full Self-Driving (FSD) capabilities.
Stein’s comments highlighted the disconnect between the company’s promotional narrative and the substantive details that investors seek. "Too much cheerleading; not enough ground-truth," he stated, emphasizing the need for more concrete information. As a result, Truist Securities has revised its calendar year 2026 EPS projection for Tesla to $3.99, down from the previous estimate of $4.87.
The revised $373 price target is derived from a discounted cash flow (DCF) analysis, which is a valuation method used to estimate the value of an investment based on its expected future cash flows. This method has been adjusted to reflect the new EPS forecast and the current market dynamics surrounding Tesla.
Despite the price target increase, the Hold rating suggests that Truist Securities remains on the sidelines, watching for more definitive progress and clarity from Tesla regarding its product roadmap and technological advancements before considering a more bullish stance on the stock. With a beta of 2.3 and annual revenue of $97.15 billion, Tesla remains a volatile but significant player in the automotive sector. For deeper insights into Tesla’s valuation metrics and financial health, including over 20 additional ProTips and comprehensive analysis, visit InvestingPro.
In other recent news, Tesla revealed its 2024 financials, reporting an annual revenue of $97.15 billion. Despite a gross margin of 18.23% falling short of analyst forecasts, Tesla maintains strong financials with over $2 billion in free cash flow. Analyst firms including Mizuho (NYSE:MFG), RBC Capital, TD Cowen, Stifel, and Canaccord Genuity have provided recent insights, with price targets ranging from $180 to $515. Tesla’s advancements in Full Self-Driving (FSD) technology and the anticipated deployment of unsupervised vehicles in Austin were highlighted by several firms. The company’s expansion into robotics, particularly with the Optimus project, is also viewed as a potential growth catalyst. However, Tesla continues to face challenges, including a complaint from the Union of Swedish Electricians over alleged unauthorized electrical work at its charging stations, and challenging the European Union’s tariffs on China-made electric vehicles. These are the recent developments in Tesla’s operations and market position.
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