Canaccord Genuity raised its price target on Tesla (NASDAQ:) stock from $298 to $404, maintaining a buy rating despite weaker-than-expected fourth-quarter deliveries. The move comes as the financial services company remains confident about the automaker’s long-term growth potential and upcoming product launches.
According to Canaccord’s Thursday note, the new target price is based on 40x Canaccord’s estimated 2027E non-GAAP earnings per share (EPS) of $10.11, compared to a previous multiple of ~34x on 2026E EPS.
“We believe this multiple is justified given the multiples and growth rates of all of Tesla’s competitors, which we view as a group of large-cap technology stocks, including Alphabet (NASDAQ:), Amazon (NASDAQ: :), Apple (NASDAQ:), Meta (NASDAQ:), Microsoft (NASDAQ:) and Nvidia (NASDAQ:),” analyst George Gianarikas said in the note.
“This collection of companies trades at a median of ~23x 2027E EPS, but has a combined revenue growth rate ~half that of Tesla between 2025 and 2027,” he added.
Tesla’s latest delivery results fell short of expectations. The company reported deliveries of approximately 495,600 in Q4 ’24, representing sequential growth of 7.1%, but below Canaccord’s estimate of approximately 533,000 and the consensus estimate of Tesla’s production in the same quarter decreased 2.2% sequentially to ~459,500 units.
Canaccord’s decision to maintain its bullish stance is centered on new product launches planned for 2025. Tesla has planned new vehicles and anticipates unit volume growth of 20-30% year-over-year.
“Tesla tends to generate excitement when it refreshes its portfolio,” the note said. This growth potential, combined with signs of declining automotive gross margins, supports Canaccord’s positive outlook. Tesla reduced the cost of goods sold per vehicle to $35,100 in Q3 FY24, the lowest level in company history.
“We will see how new products influence the mix, but we expect margins to improve in 2025,” Mr. Gianarikas said.
Canaccord also highlighted Tesla’s progress in self-driving software (FSD). Although the company remains cautious about robot-axis deployment timelines, recent FSD software updates have been called “incredible, incredible” by users, suggesting higher adoption rates .
“An increase in FSD adoption could positively impact Tesla’s profit margins and build confidence in the company’s ability to monetize its substantial investment in artificial intelligence infrastructure,” continued the ‘analyst.
Additionally, Tesla’s energy storage segment remains a bright spot. Deployments jumped to around 11.0 GWh in 4Q24, up 59.4% sequentially and 243.5% year-over-year. Construction of Tesla’s mega-factory in Shanghai was completed in late 2024 and production is expected to start in Q1 25.
Finally, Canaccord highlights the potential of the robotics sector for Tesla, insisting that it sees 2025 “as the year of the robot”.
“We see growing support for Tesla’s earnings multiple due to its leadership in this growing sector.
