Tesla's Newest Stock-market Bull Says the Company is Unmatched

Despite the challenging environment for electric vehicle (EV) manufacturers, Tesla Inc.'s stock still has the potential to perform well, according to the latest bullish analysis from Wall Street. Stifel analyst Stephen Gengaro recently initiated coverage of Tesla shares (TSLA), giving them a buy rating and setting a price target of $265. Gengaro emphasized that Tesla is unrivaled in the EV market, comparing it more to technology giants than traditional car manufacturers.

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Gengaro acknowledged the recent slowdown in EV sales, but he remains optimistic about Tesla's future. He predicts that the company, which has seen its stock decline by 25% so far this year, will benefit from several positive trends. These include increased availability of charging stations, the introduction of more affordable models, and advancements in Tesla’s overall technology.

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Gengaro noted that the recovery would not be immediate. Tesla's management aims to begin production of the low-cost Model 2 by early next year, but Gengaro and his team are conservative about this timeline in their models. He believes that forward earnings expectations for Tesla are stabilizing after significant downward revisions.

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Over the past 12 months, the consensus forecast for Tesla’s earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2024 dropped by 41%, and the 2025 forecast fell by 46%. With these negative revisions likely behind, Gengaro views this as a positive dynamic for Tesla shares.

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In Gengaro’s assessment, Tesla has no true competitors in the EV market. He argues that traditional car manufacturers lack the necessary technological expertise in EVs and are significantly behind in the electrification race. Additionally, they do not have the leadership of Elon Musk, which he considers a critical advantage for Tesla.

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Rather than comparing Tesla to other car manufacturers, Gengaro suggests viewing Tesla as a technology company similar to Apple Inc., Amazon.com Inc., Alphabet Inc., and Microsoft Corp. Like these tech giants, Tesla excels with its technological innovation, offers a compelling long-term growth outlook, and stands to benefit from the rise of artificial intelligence (AI).

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Gengaro is particularly optimistic about the potential of Tesla’s Full Self-Driving (FSD) technology. He believes FSD could create significant value through sales, potential licensing agreements, and as a crucial component for future robotaxi initiatives. This AI-related development adds another layer to Tesla’s growth prospects, further aligning it with leading technology companies.

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In conclusion, while the EV market is currently facing headwinds, Gengaro's analysis suggests that Tesla's unique position and technological advancements position it for future success. The company's strategic initiatives, combined with the stabilization of earnings expectations, support a positive outlook for Tesla’s stock, making it a compelling investment despite recent setbacks.

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