Tesla (NASDAQ:TSLA) is a company whose main business to date has been EV car sales, but famously its valuation wildly differs from other auto companies. That’s because it is viewed as more of a tech player, with other opportunities – particularly in AI – seen as up for grabs in the years ahead.
TipRanks Cyber Monday Sale
- Claim 60% off TipRanks Premium for data-backed insights and research tools you need to invest with confidence.
- Subscribe to TipRanks' Smart Investor Picks and see our data in action through our high-performing model portfolio - now also 60% off
But those opportunities don’t mean Tesla deserves unlimited credit. That appears to be the view of Morgan Stanley’s Andrew Percoco, an analyst ranked among the top 2% on Wall Street. “Tesla is a clear global leader in electric vehicles, manufacturing, renewable energy, and real world AI and thus deserving of a premium valuation,” the 5-star analyst said. “However, high expectations on the latter have brought the stock closer to fair valuation.”
Although it’s widely recognized that Tesla operates well beyond traditional auto manufacturing, the analyst expects a “choppy trading environment” over the next year. Percoco sees potential downside to consensus estimates, and the key drivers tied to its non-auto segments seem fully valued at current levels. With the stock trading at 30x projected 2030 EBITDA (48x on MSe), with risks to near-term Street expectations, and with non-auto catalysts already priced in, Percoco thinks investors should “wait for a better entry.”
As such, having assumed coverage of the EV leader (taking over from Adam Jonas), Percoco has downgraded TSLA’s rating from Overweight (i.e., Buy) to Equal-weight (Neutral). Although Percoco has raised his price target from $410 to $425, the new figure sits 6.5% below the current share price. (To watch Percoco’s track record, click here)
Percoco’s new rating follows a full refresh to MS’s SOTP (sum-of-the-parts) valuation framework. That includes a lowered Tesla Auto valuation, now at $55 vs. $75 beforehand, because Percoco expects weaker volumes. His outlook includes a 10.5% cut to 2026 volumes and an 18.5% reduction in total deliveries through 2040, reflecting a more cautious view of the speed of EV adoption in the US and increasing global competition. This more conservative stance on the EV market means the MSe 2026 auto volume forecast sits 13% below consensus.
That new auto valuation is less than that of the new addition to the SOTP framework – the Humanoid business. Although the humanoid market is still in its early stages, Percoco thinks Tesla is well placed to lead given its manufacturing scale, vertical integration, data access, compute and energy capabilities, and its strong position in real-world AI. With that in mind, he now attributes $60 per share to Tesla’s Optimus segment.
Network Services, which includes FSD (full self-driving), is the “crown jewel,” and is given the lion’s share of the valuation – valued at $145, with Percoco believing its “leading-edge personal autonomous driving offering is a real game changer, and will remain a significant competitive advantage over its EV and non-EV peers.”
Tesla Mobility, which includes the Robotaxi business, comes next, valued at $125/share. Lastly, the Energy business is valued at $40/share.
Turning now to the rest of the Street, where based on a fairly even 11 additional Holds, 12 Buys, and 10 Sells, the stock claims a Hold consensus rating. At $383.54, the shares are expected to post a 12-month decline of 16%. (See Tesla stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.