Tesla shares rose last week after third-quarter earnings beat expectations and CEO Elon Musk gave optimistic guidance.
Wall Street analysts had mostly positive reviews, with several maintaining buy ratings on Tesla stock, although not everyone was convinced.
Early Thursday, the morning after the earnings report, Bank of America reiterated its buy rating and raised its price target from $255 to $265. By market close on Friday, shares had already moved past that higher view, ending up 3.3% at $269.19 after rising 22% in the previous trading session.
Still, third-quarter earnings were so strong that BofA also upgraded its full-year earnings forecasts for 2024, 2025 and 2026. Analysts also pointed to bullish earnings comments, such as 20%-30% output growth next year. (presumably supported by a new EV model), prospects for the autonomous Cybercab, improvements in the Full Self Driving assistance feature, lower costs for the 4680 battery and upside potential for regulated credit sales.
“The bottom line is that Tesla is gearing up for the next wave of growth,” BofA wrote.
So are Tesla shares a buy now?
In summary, the bank’s analysts said the company is a pioneer in electric vehicles and could be successful as demand increases over time, while its self-financing status and access to cheap capital should fuel more growth.
“TSLA has reinvigorated the growth story with both commentary and results that act as catalysts for the stock in the near term, such as the Robotaxi event in August, new product launches in early 2025 and potential licensing for FSD,” she added to. “That’s why we rate the stock Buy.”
At Morgan Stanley, analysts maintained their top pick designation for Tesla stock and backed their $310 price target, highlighting the company’s forecast for 20%-30% volume growth.
Similarly, Wedbush reiterated an outperform rating on Tesla stock and a $300 price target, while analyst Dan Ives also flagged the growth forecast and wider margins.
But JPMorgan analysts rated Tesla shares underweight and set a price target of $135, implying a downside of almost 50%.
The bank warned that some of the catalysts for strong third-quarter profits, such as regulatory credits sold to companies that don’t meet emissions requirements, are not sustainable in the longer term.
“As other automakers expand their electric offerings, they should be able to generate their own credits over time, negating and ultimately eliminating the flow of payments from competitors to Tesla,” the report said.
This story originally appeared on Fortune.com
