Despite the challenging environment that the automotive sector has been in for some time, Tesla (NASDAQ: TSLA) is seeing stock prices go up.
The road up to this point was anything but smooth — up until late October, Tesla stock was in the red on a year-to-date (YTD) basis. Supply chain issues, price cuts, ever-mounting competition, and negative reactions to the company’s ‘Robotaxi Day’ event — it seemed like the issues would never end.
While some of those issues do persist, often to a lessened extent, Tesla shares have since recovered, bolstered by a bevy of good news. The company’s Q3 2024 earnings report on October 23 saw a significant outperformance in terms of earnings per share (EPS) compared to analyst estimates. Just two weeks after that, Donald Trump, Tesla CEO and co-founder Elon Musk’s candidate of choice and key ally, secured victory in the 2024 U.S. presidential election.
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Since the initial rally ignited by the earnings call, Tesla stock has seen prices increase from $213.65 to $384.18 at press time. This 79.81% surge has brought YTD returns up to 54.65%.
Valuation has long been a concern with TSLA stock — and although it is better positioned than most, the business is not immune to the headwinds facing carmakers across the world.
However, on Monday, December 9, a crucial institutional investor that has thus far been quite bearish on Tesla shares raised its price target from $295 to $370, calling the company a ‘key idea for 2025.’
Deutsche bank sees computing and healthy balance sheet as Tesla stock’s main advantages
Deutsche Bank’s Monday note reflected on the challenging environment vehicle makers are in at the moment — with pricing pressure, high inventories, and muted demand in the key European, Chinese, and North American markets cited as factors that will most likely persist in 2025.
With that being said, the banking giant emphasized that Tesla, being at the ‘forefront of technological and scale curve in terms of reaching practical autonomy’, is one of the companies in the space most likely to outperform.
Together with Tesla, analyst Tim Rokossa highlighted auto part suppliers Autoliv (NYSE: ALV) and Dana Incorporated (NYSE: DAN) as the top picks in the industry. Rokossa raised his price target for Tesla stock to $370 from $295. In the note, the analyst stated that:
‘On the US side, our view is that investors will seek safe havens where margin expansion and outgrowth are relatively shielded from price/mix and environment-driven headwinds.’
In addition, Deutsche Bank noted that Tesla’s massive computing resources, which allow it to train several end-to-end models within a week, place it firmly ahead of competitors in the race to autonomous driving.
However, readers should remember that, while such a large price target increase is a sign of optimism, Deutsche Bank’s price target still equates to a 3.69% downside from the current Tesla stock price.
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