Why Tesla Stock Is Trading Higher Wednesday: 'Very Well Positioned To Deliver Robust Multi-Year Growth'

Tesla Inc TSLA shares are trading higher Wednesday following a bullish analyst initiation from Stifel. Here’s what you need to know.

What To Know: Stifel analyst Stephen Gengaro initiated coverage on Tesla late Tuesday with a Buy rating, setting a price target of $265.

“We believe TSLA is very well positioned to deliver robust multi-year growth,” the analyst said in a note.

Gengaro believes Tesla’s revamped Model 3 and upcoming refresh of the Model Y should help boost sales in the near term. The analyst also noted that he expects Tesla’s next-gen Model 2 vehicle to drive very strong demand for the EV maker.

“We also believe TSLA’s AI-based Full Self-Driving (FSD) initiative has the potential to generate significant value through sales of FSD, possible licensing agreements, and as a critical driver of longer-term RoboTaxi initiatives,” Gengaro said.

Last quarter, Tesla missed estimates, but shares rallied as CEO Elon Musk reiterated his vision for the future around AI, Full Self-Driving and robotaxis. Gengaro believes Tesla’s upcoming report poses near-term risk as he is cautious on delivery numbers following the company’s “lackluster” first quarter. However, he noted that downward estimate revisions appear to be close to done.

He also sees other risks around near-term EV adoption headwinds and the upcoming U.S. election, but he expects that Tesla’s strong balance sheet and robust free cash flow will allow it to fund continued growth that will ultimately drive Tesla’s valuation higher.

The Stifel analyst’s $265 price target includes 35 times projected 2025 EBITDA estimates, which equates to $197 per share, 50% of estimated upside from Full Self-Driving, which equates to $57 per share, and 25% of estimated robotaxi upside, which equates to $11 per share.

Gengaro highlighted additional potential upside from the company’s supercharger network, which drives brand loyalty and profitability, from energy generation and storage products and from autonomous humanoid robots.

Tesla is due to report earnings for the second quarter in mid-July. The company is expected to report earnings of 60 cents per share and revenue of $24.19 billion, according to estimates from Benzinga Pro.

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TSLA Price Action: Tesla shares were up 2.87% at $192.73 at the time of publication, per Benzinga Pro.

Photo: courtesy of Tesla.