Piper Sandler Raises Tesla Price Target and Delivery Estimates

Piper Sandler analysts have increased their price target for Tesla stock to $310, up from $300, due to improved delivery estimates and a lower weighted average cost of capital (WACC).

The adjustment is influenced by higher vehicle delivery forecasts, especially for fiscal year 2024, with the firm now predicting Tesla will deliver approximately 1.75 million units, an increase of 23,500 units from previous estimates.

In the third quarter alone, the firm anticipates Tesla will deliver nearly 459,000 units, representing a 5.4% year-over-year increase. Analysts believe that Tesla’s performance in China during Q3 could be its strongest quarter to date.

“Unlike other regions, weekly registration data in China allows for more precise tracking. Therefore, we have strong confidence that Tesla will exceed 175,000 units in Q3,” the analysts stated.

Meanwhile, demand in Europe is experiencing weakness due to declining electric vehicle subsidies and broader economic challenges. However, deliveries of the Cybertruck are expected to bolster Tesla’s sales in the U.S.

“In the U.S., sales data can be less accurate due to reliance on third-party estimates. Nevertheless, we believe that the Cybertruck will help achieve a quarter-over-quarter increase,” the report indicates.

For Tesla’s “Rest of World” regions, which typically account for 10% to 15% of total deliveries, analysts project this figure at 12% for Q3. However, based on historical performance, Tesla may exceed the current estimate of 55,000 units.

Additionally, the analysts noted a reduction in the WACC from 13.5% to 13.3%. They caution that while delivery numbers are crucial, upcoming developments regarding Tesla’s robo-taxi program, set for a major announcement on October 10, could shift focus.

Piper Sandler has maintained its Overweight rating on Tesla stock. However, potential risks to their outlook include possible production delays, customer dissatisfaction, or supply chain disruptions.