RBC Capital Markets analyst Tom Narayan Remains optimistic about EV giant Tesla Inc (NASDAQ:TSLA) over the long term despite the stock’s poor performance last year.
Take the analyzer: Narayan believes Tesla is currently between two waves, with the Model 3 and Y largely saturated and the company waiting for the next big boost from its affordable car, which is expected to be priced under $30,000. . According to the analyst, production of the low-cost Tesla is expected to begin in the second half of 2025.
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“Elon doesn’t think about day-to-day or month-to-month things; He is looking at things from the perspective of years, if not decades. Ultimately, we will get this catalyst with the next generation vehicle,” Narayan said in an interview with CNBC.
RBC Capital Markets maintains a ‘buy’ rating on Tesla with a price target of $298. “There are some long-term tectonic things that people aren’t talking about that people like me will start writing reports about and eventually get people interested,” Narayan said.
Only 10% of Narayan’s valuation model is based on Tesla’s core auto business. The remainder depends on Tesla’s autonomous driving efforts and energy storage business. “Nobody is talking about energy storage; If you guys have ever used FSD, it’s the most amazing product I’ve used since the iPhone,” he said.
energy boost: Last year, Tesla’s energy storage deployment reached 14.7 GW, more than double from a year earlier. Revenue at the energy generation and storage business rose 54% to $6 billion, while profits nearly quadrupled. In January, the company said it expected its deployment and revenue growth rates in the energy storage business in 2024 to outpace the automotive end of the business for which the company is better known.
why it matters: As far as autonomous driving goes, Tesla sees it as the main driver of its market value. Musk said in January that Tesla’s revenue would be “really crazy” once the FSD is approved by regulators.
Tesla’s FSD software is still in its beta stage, meaning it still requires active driver supervision and does not make the vehicle autonomous. However, the company continues to enhance its capabilities with software updates.
However, Evercore analysts are not on the same page as Narayan. In a report on Monday, he said Tesla is fast becoming a “2027 story,” while questioning whether the best case scenario for a cheaper, more affordable Tesla vehicle would be 2026 rather than the consensus for more than 1 million. More than half a million in the U.S., Bloomberg reported.
On Wednesday, Wells Fargo also downgraded the stock to ‘underweight’ from ‘equal weight’ and cut the price target to $125 from $200, citing concerns about disappointing deliveries and price cutting.
Price Action: Tesla stock closed down 4.12% at $162.5 on Thursday. Year-to-date, it has declined about 34.6%, according to data from Benzinga Pro.