Piper Sandler analyst Alexander Potter lowered on Tuesday the firm’s price target on Tesla by 11% to 400$, while maintaining an ‘Overweight’ rating on its stock.
In a new research note, the analyst said Piper Sandler expects underwhelming results in the first quarter, amid a lack of details on upcoming cheaper models. However, “major catalysts” like the robotaxi are likely to change the scenario.
With the company reporting its first-quarter earnings next week, Potter stated that “Q1 financials will likely underwhelm,” adding that “deliveries of 337k units missed consensus (of 378k), and as a result, gross margin is probably trending near multi-year lows.”
As of the time of writing, Tesla shares are trading 5.3% lower at $240 on Wednesday after FED Chair Jerome Powell warned that the tariffs will push toward higher unemployment and higher inflation.
Based on Tuesday’s closing price of $254.11, the firm’s new price target implies an upside potential of 57.4%.
Earlier this month, Tesla reported it delivered 336,700 vehicles in the first quarter, down 12.9% from the same period last year. Production also fell 16% to just over 360,000 units, as the EV maker shifted to the production of its refreshed Model Y.
The U.S. brand’s sales plunged across Europe in the first quarter, with vehicle registrations in countries like Germany and France falling by more than 50%. The decline comes amid rising competition from Chinese EV makers and growing concerns over Elon Musk’s political involvement.
Piper Sandler’s analyst also said that “it’s hard to rely on new products for delivery growth, because Tesla hasn’t disclosed specifications or pricing for ‘Model 2’,” as it focuses on full self-driving (FSD) and the development of its robotaxi.
In October, Elon Musk stated on an earnings call that “having a regular $25K model is pointless.” However, amid the fourth quarter results in January, the CEO clarified that the company is “still on track to launch a more affordable model in the first half of 2025 and will continue to expand our lineup from there.”
Outlook
“While our 2-3 month outlook leans bearish, remember that Tesla can rally sharply whenever ‘big picture’ catalysts emerge,” Potter noted, highlighting “major catalysts on the horizon” such as the brand’s robotaxi.
Tesla unveiled its fully autonomous Cybercab and Robovan models in October. In late January, the company’s chief executive said on an earnings call that it is launching its “unsupervised, no one in the car, full self-driving” Cybercab as a paid service in Austin in June.
This Tuesday, Musk stated on a social media post that vehicles will start driving autonomously from the factory to the customer’s house “this year” already, two months after the brand announced that its vehicles started driving to their loading dock lanes on their own.
“Perhaps not on the Q1 call, but eventually, we think Tesla will report good news on these topics,” the analyst concluded. “When that day arrives, we wouldn’t want to be underweight.”
Earlier this week, Cantor Fitzgerald’s analyst Andres Sheppard reiterated the company’s ‘Overweight’ stock rating, assessing the impact of newly imposed U.S. tariffs on vehicle and auto parts imports on the carmaker, seen “as better positioned and less impacted relative to other OEMs.”
Last week, ARK Invest’s CEO and CIO Cathie Wood also reaffirmed the investor’s ‘bullish’ view on Tesla, based largely on the launch of a cheaper model this year and the brand’s robotaxi service in June. Wood stated that, despite Elon Musk’s criticism, he is “maniacally focused on humanoid robots.”
