Tesla Stocks Surge Following Mizuho's Upgrade
Investing.com -- Tesla (NASDAQ:TSLA) shares rose 2% in pre-market trading on Tuesday. This increase followed Mizuho Securities upgrading the electric vehicle manufacturer's stock from 'Neutral' to 'Outperform' and significantly raising its price target. Analyst Vijay Rakesh cited various factors for the positive outlook, including regulatory winds regarding autonomous driving, potential benefits from new policies under the Trump administration, and Tesla's competitive position in the electric vehicle market.
Rakesh's analysis points to a loosening of the regulatory framework for autonomous driving, believing this could provide more upward potential for Tesla's Full Self-Driving (FSD) and Robotaxi valuations. The analyst also emphasized the company's potential to exceed global light vehicle production (LVP) compared to its competitors with a more profitable EV roadmap. Mizuho's sum-of-the-parts (SOTP) valuation sets a target of approximately $1.8 trillion, or $515 per share, up from a previous target of $230. This new target is based on about 15.5 times the firm's projected sales for 2025.
This upgrade comes amid expectations of positive alignment with Trump administration policies, which are thought to benefit Tesla more than its competitors. Rakesh anticipates that Tesla's strong supply chain and balance sheet, along with potential new policies like the expiration of EV leasing credits in the U.S., could position the company advantageously. He also predicts that Tesla's autonomous technology is advancing toward large-scale commercialization, with Full Self-Driving expected to be approved as Level 4+ in the U.S. by 2025 and in Europe by 2027.
Mizuho's valuation also encompasses Tesla's potential growth in humanoid robots, expecting the company to reach 7.2 million units by 2040, which is significantly below Tesla's own forecasts. Rakesh believes that despite short-term challenges such as potential cancellation of EU tariffs and U.S. EV tax credits, these challenges will be less impactful for Tesla compared to its competitors.
Rakesh stated, "We see TSLA benefiting from positive legal exposure due to CEO Musk's alignment with the Trump administration." This statement highlights the perceived synergy between Tesla's strategic direction and the current political environment, which could facilitate the company's growth and market share gains.
Today's stock movement for Tesla reflects investor optimism following Mizuho Securities' upgrade and expectations for positive regulatory and legal developments that could enhance the company's growth trajectory.