Tesla Stock (TSLA) Target Raised, Analyst Expects Better Entry Point

Tesla's stock (NASDAQ:TSLA) has had a boost to it's price target from Cantor Fitzgerald, revising significantly higher to $510 from $355, while maintaining an “Overweight” rating. It was suggested within the note however that a better entry point may still be in sight. The adjustment follows the release of Tesla’s third-quarter results, which presented a mixed bag of robust revenue growth alongside declining profits.

The third-quarter financial results revealed a 37% decline in profit, settling at $1.4 billion, marking the fourth consecutive quarter of declining earnings, however revenue experienced a 37% increase, reaching $28.1 billion. This revenue surge was partially attributed to customers seeking to capitalize on a $7,500 federal EV tax credit.

The company's gross margin stood at 18%, an improvement year-over-year, but still below previous levels. Tesla's CEO, Elon Musk, has emphasized the company's broader initiatives, including the expansion of its AI-driven robotaxi service to up to 10 U.S. cities by the end of the year.

Cantor Fitzgerald's optimism stems from Tesla's record vehicle deliveries and substantial growth within its energy generation and storage segment. The firm also acknowledged Tesla's strategy of introducing lower-priced vehicles, aiming to bolster demand and regain market share.

However, the firm cautioned that Tesla's shares are trading near all-time highs, resulting in a forward price-to-earnings ratio exceeding 200, which may give new entrants pause.

Price Targets

While Cantor Fitzgerald's increased price target reflects confidence in Tesla's long-term prospects, the mixed financial results and high valuation suggest that the markets may reward patience.