Mizuho Securities analyst Vijay Rakesh reiterated a Buy rating on Tesla (TSLA) stock despite a disappointing performance by the EV maker in the December quarter. Rakesh also maintained his price target of $515 on TSLA stock, which implies 28.7% upside potential from current levels.
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Tesla missed both earnings per share (EPS) and sales estimates for Q4 FY24. However, the company remains optimistic about a rebound in 2025. Rakesh also resonates optimistic views on Tesla’s recovery this year, thanks to its FSD (full self-driving) capability, Cybercab venture, and launch of cheaper models.
Here’s Why Rakesh Is Bullish on Tesla
Let’s understand Rakesh’s stance on Tesla’s future potential.
- Autos Targeting Return to Growth in 2025 – Rakesh projects full-year Fiscal 2025 deliveries to grow by 26% over the 2024 figure. The analyst acknowledged that some headwinds, such as slowing demand in China, the loss of EV tax credits, and stiff competition, still persist in achieving a higher growth rate. Still, Tesla will be better positioned to outpace such headwinds and remain the number 1 U.S. EV supplier, he added.
- New Low-Cost Models – Tesla is set to launch new low-cost EV models in the U.S. in the first half of 2025. Also, the lower-cost Model Y (Juniper) has started getting pre-orders in China. These could potentially bolster Tesla’s sales this year.
- Cybercab Timing – Despite the slow rollout and some initial challenges, Tesla has been able to reduce the delivery lead time to 1-2 weeks. Plus, Cybercabs are poised to become eligible for the $7,500 EV tax credits, acting as a major catalyst for growth.
- New Administration Beneficial for FSD – Telsa is expected to launch its first unsupervised FSD in Austin this year, with the possibility of launching in China and the EU later. Under Trump’s administration, Tesla’s FSD ambition is expected to accelerate with favorable regulations.
- Optimus Humanoid Robots – Tesla is also expected to improve its Optimus humanoid robot software and launch a pilot program in 2025. Rakesh views the humanoid robot segment as a potential $1 trillion market in the long term.
Overall, Rakesh is highly encouraged by Tesla’s ability to improve its battery technology and be a leader in the autonomous driving landscape, aided by solid AI software. Accompanied by the Cybercab and Optimus push, Tesla is well on the way to reaching $1.5 to $2 trillion in market cap in the next ten years, Rakesh concluded.
What Are the Predictions for Tesla Stock?
Not all analysts share the same enthusiasm for Tesla stock as Rakesh. On TipRanks, TSLA stock has a Hold consensus rating based on 12 Buys, 12 Holds, and nine Sell ratings. Also, the average Tesla price target of $335.10 implies 16.3% downside potential from current levels. Meanwhile, in the past year, TSLA shares have zoomed over 113%.
