Baird sharply raised its price target on Tesla by 71% on Friday, becoming the Wall Street institution with the most bullish outlook on the Elon Musk-led company’s stock.
The firm’s analyst Ben Kallo increased the target price to $548 from $320 while upgrading the rating from Neutral to Outperform.
The new target is now the highest among Wall Street analysts, surpassing Wedbush’s recently reiterated $500 target.
Based on Thursday’s closing price of $416.85, Baird’s target represents an upside potential of 31.5%.
However, Kallo cautioned that “near-term fundamentals will be choppy” as Baird expects Tesla sales to decline in 2025.
In a new research note, the analyst noted that there were “relatively muted stock reactions following a series of less than stellar quarters.”
Despite that, “investor inbounds regarding long-term initiatives lead us to believe focus has increasingly shifted to the future for TSLA,” Kallo wrote.
The analyst highlighted the recently proposed pay package for CEO Elon Musk, which is “built on lofty targets.”
The plan links 12 tranches of compensation to operational and market-cap milestones, with the top target at $8.5 trillion, nearly eight times Tesla’s current valuation.
It also ties rewards to large-scale deployment of next-generation products, including 1 million Robotaxis in operation and 1 million humanoid AI Bots delivered.
The CEO is backed by the Board for the following decade, and must deliver these milestones to be able to receive the pay package.
In an interview with Bloomberg last week, the Board’s Chair Robyn Denholm said that Musk has returned to being “front and center at the company,” after winding down his role as a US government adviser earlier this year.
Ben Kallo noted that Tesla is up 10% year to date, “despite three consecutive quarters of missing estimates” or “meeting estimates that were revised downward.”
The stock has risen by over 74% over the last 12 months.
Tesla shares have rallied sharply in recent weeks, with third quarter vehicle deliveries expected to grow year on year, partially due to the sales push amid the end of $7,500 EV tax credit.
At the same time, progress with Tesla‘s Optimus humanoid robot and the upcoming launch of its Robotaxi service in the US — set for later this month — are boosting analysts’ optimism.
“Tesla is increasingly viewed as the leader in physical AI,” Kallo added.
Late last week, Elon Musk has purchased Tesla stock for the first time in five years.
The chief executive acquired over 2.5 million shares, with the total transaction valued at about $1 billion — the biggest ever share buy on open market across all public companies.
