Tesla (TSLA) stock upgraded to “Outperform” at Wolfe Research

Tesla stock (NASDAQ:TSLA) may not have seen a meteoric rise following its latest 3-to-1 stock split, but the electric vehicle maker seems to be earning quite a bit of approval from Wall Street. Just recently, for one, Tesla received an optimistic outlook from Wolfe Research, which upgraded TSLA shares from “Market Perform” to “Outperform.” 

Apart from upgrading TSLA shares to “Outperform,” Wolfe Research analyst Rod Lache also raised his price target for the electric vehicle maker from $317 to $360 per share. Wolfe raised its EV penetration estimates for the United States from 10% to 20%, thanks in part to the Inflation Reduction Act. The analyst raised his 2023 and 2025 EPS estimates from $6.12 and $12.70 to $7.40 and $16 per share. 

More detail: Rod raised his $TSLA EPS ests and are now similar to mine: 2023 $7.40 (from $6.12; I am at $8.00); 2025 $16.00 (from $12.70; I am at $16.00). It appears that a higher global EV adoption forecast drove his ests higher. pic.twitter.com/nKTtXklW2M

— Gary Black (@garyblack00) September 6, 2022

“The Inflation Reduction Act stands out as far and away the most consequential development for the U.S. Auto Industry that we’ve seen in a very long time. We believe that it has potential to affect the entire value chain—Significantly changing the trajectory of EV adoption, as well as the competitive landscape and earnings prospects for OEMs and Suppliers. We believe that this development is still far from fully appreciated,” the Wolfe Research analyst noted. 

As noted in an Investing.com report, the penetration rate for electric vehicles this year currently stands at about 5%. Global EV penetration estimates for 2025, on the other hand, have been raised to 22%, up from prior estimates of 17.5%. It should also be noted that Lache expects the United States government to direct incentives worth about $11 billion per year to Tesla. 

Update:Wolfe Res. upgraded #Tesla to Outperform fr Market Perform w/ $360 PT (from 317)

IRA w/ „potential to affect the entire value chain, sign. changing the trajectory of EV adopt., competitive landscape+ earnings prospects

Ests to direct incentives of $11bn/a tow. TSLA https://t.co/m0gQWqqPZi pic.twitter.com/eM8OjP34qi

— Berlinergy (@Berlinergy) September 6, 2022

The analyst assumed modest contributions from Tesla’s other products, such as its Energy division and newer ventures like Tesla Insurance, Tesla Service and Charging, and the company’s Full Self-Driving program. “While we remain cautious on several of these areas (especially FSD), the improving outlook within their core Auto business supports meaningful earning upside over the next few years,” Lache wrote.  

Commenting on Wolfe Research’s updated rating on TSLA, The Future Fund Managing Partner Gary Black noted that Rod Lache actually topped Wall Street’s Institutional Investor rankings for several years. Considering the analyst’s reputation and his comments on Tesla, it does appear that the electric vehicle maker will only gain even more momentum in the near future. 

Disclaimer: I am long TSLA.

Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.

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Source: TESLARATI

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