Canaccord Genuity has lifted its Tesla (NASDAQ:TSLA) stock price target to $404 from $298, maintaining a Buy rating despite weaker-than-expected deliveries in the fourth quarter. The move comes as the financial services firm remains confident about the carmaker’s long-term growth potential and the upcoming product launches.
According to Canaccord’s Thursday note, the new target price is based on 40x Canaccord’s 2027E non-GAAP earnings per share (EPS) estimate of $10.11, compared to a previous multiple of ~34x on 2026E EPS.
“We feel this multiple is justified based on the multiples and growth rates of Tesla’s comp set — which we deem to be a group of megacap tech stocks, including Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Meta (NASDAQ:META), Microsoft (NASDAQ:MSFT), and Nvidia (NASDAQ:NVDA),” analyst George Gianarikas said in the note.
“This set of companies trades at a median of ~23x 2027E EPS but has a combined revenue growth rate ~half of Tesla’s from 2025-2027,” he added.
Tesla’s latest delivery results were below expectations. The company reported 4Q24 deliveries of around 495,600, representing 7.1% sequential growth but falling short of Canaccord’s estimate of ~533,000 and the consensus estimate of ~498,000. Tesla’s production in the same quarter declined by 2.2% sequentially to ~459,500 units.
Canaccord’s decision to maintain its bullish stance centers on new product introductions slated for 2025. Tesla has guided for new vehicles and anticipates 20-30% year-over-year unit volume growth.
“Tesla tends to deliver excitement when it refreshes its portfolio,” the note stated. This growth potential, combined with signs of bottoming auto gross margins, supports Canaccord’s positive outlook. Tesla reduced the cost of goods sold per vehicle to $35,100 in 3Q24, the lowest in the company’s history.
“We’ll see how new products impact the mix — but we do forecast improving margins in 2025,” Gianarikas said.
Canaccord also highlighted advances in Tesla’s Full Self-Driving (FSD) software. While the firm remains cautious about timelines for robotaxi deployments, recent updates to FSD have been described as “unbelievable, incredible” by users, signaling potential for higher adoption rates.
“An increase in FSD adoption could positively impact Tesla's profit margins and bolster confidence in the company's ability to monetize its substantial investment in artificial intelligence infrastructure,” the analyst continued.
Moreover, Tesla’s energy storage segment remains a bright spot. Deployments surged to about 11.0 GWh in 4Q24, up 59.4% sequentially and 243.5% year-over-year. The construction of Tesla’s Shanghai Megafactory was completed in late 2024, and production is expected to ramp up in 1Q25.
Lastly, Canaccord points to the potential in the robotics sector for Tesla, emphasizing it sees 2025 “as the year of the robot.”
“We see increasing support for Tesla’s earnings multiple based on its leadership in this burgeoning sector.”