Stifel has rated Tesla's stock as "buy" for the first time, with a target price of $265. The analyst at the investment bank said that Tesla is unparalleled in the electric car market. Compared to the title of "automotive giant", Tesla is more like a technology giant.
According to Stifel independent investment bank analyst Stephen Gengaro, even though auto manufacturers are facing challenges such as slowing demand and increasing competition, the stocks of Tesla could still rise. Additionally, traditional auto manufacturers lack the technology needed to compete with Tesla in the EV industry.
In its latest report, Stifel has rated Tesla's stocks as a buy for the first time with a target price of $265. Gengaro wrote that Tesla is unparalleled in the electric vehicle market and is more of a technology giant than an 'automaker giant'.
As of Wednesday's U.S. stock market close, Tesla's stock price had surged nearly 5% to $196.37, though the stock is still down about 21% year-to-date. The target price mentioned above suggests the stock could rise another 35% above its current level.
Gengaro acknowledges that EV sales have slowed recently but believes that Tesla's prospects will be better. He wrote that as charging station availability increases, cheaper models are introduced, and Tesla's overall technology improves, the company should see a trend of improvement.
Certainly, this is not a short-term game. Although Tesla management predicts that the company can begin producing the low-cost Model 2 in early 2023, Gengaro and his team's predictions are more conservative.
Furthermore, Gengaro believes that Tesla's future profitability expectations are hitting rock bottom. Previously, the market generally forecast that the company's EBITDA in 2024 had declined by 41% in the past 12 months and that its forecast for 2025 had declined by 46%. He said that because these negative estimation corrections may have ended, this dynamic may be "favorable to the stock price".
In Gengaro's view, Tesla has no rivals in the EV industry: "there is simply no direct competition." He explains that this is because traditional auto manufacturers lack the technological knowledge required for EVs and are far behind in the electrification game. Additionally, "their CEOs are not Elon Musk."
Gengaro also states that he prefers to view Tesla as a technology company similar to Apple, Amazon, Alphabet Inc., and Microsoft. Like these giants, Tesla's technology shines and has convincing long-term growth prospects, and it will benefit from the rise of artificial intelligence.
Regarding artificial intelligence, Gengaro holds an optimistic attitude towards Tesla's full self-driving business, which "may create enormous value through FSD sales and possible licensing agreements and become a key driver of long-term autonomous taxi plans."