On October 24, 2024, Goldman Sachs updated its outlook on Tesla (NASDAQ:TSLA) stock, increasing the price target to $250 from the previous $230 while maintaining a Neutral rating. The revision reflects a more favorable view of Tesla's earnings potential, attributed to higher gross margins and increased regulatory credit revenue.
The firm recognizes Tesla's strong position in the electric vehicle (EV) market, citing the company's robust technical capabilities in artificial intelligence, software, and hardware. Tesla's integrated approach to charging and storage solutions is considered a significant advantage for its long-term growth.
Despite the raised price target, Goldman Sachs notes potential challenges that may affect Tesla's performance, including a longer-than-expected deployment of its Full Self-Driving (FSD) technology and anticipated volatility in auto industry fundamentals. These factors could lead to delivery numbers for 2024/2025 that are lower than the company's own forecasts.
Goldman Sachs' updated 12-month price target is based on revised earnings per share (EPS) estimates, reflecting anticipated higher gross margins and regulatory credit revenue. This target indicates the firm's expectations for Tesla's financial performance in the upcoming year.
In related news, Tesla reported a third-quarter revenue of $25.18 billion, a slight increase from the previous year, with automotive gross profit margins at 17.1%. CEO Elon Musk announced plans to produce a minimum of 2 million Cybercabs annually. Mizuho maintained a Neutral rating with a steady price target of $230, while Baird reaffirmed an Outperform rating with a $280 price target.
RBC Capital also adjusted its outlook, increasing the price target to $249. These updates follow Tesla's strong third-quarter results and plans for a driverless ride-hailing service in California and Texas in 2024.
As of Q2 2024, Tesla reported a revenue of $95.32 billion, with a P/E ratio of 54.8, indicating significant future growth expectations. Despite a gross profit margin of 17.72%, characterized as weak, the company holds more cash than debt, supporting its financial stability amid industry challenges.