Tesla (NASDAQ: TSLA) stock rose in pre-market trading after Barclays raised its price target for the EV giant, citing long-term growth potential.
Barclays has reiterated its Equal-weight rating on Tesla shares (NASDAQ: TSLA) while raising the price target to $225 from $180. The firm expects the EV giant to miss its auto gross margin percentage target for the second quarter, projecting it at 16.0%. This anticipated decline in margin is attributed to several factors, including weaker pricing and the absence of Full Self-Driving (FSD) package revenues. However, Barclays acknowledges that volume increases and benefits from lower raw material costs could partially offset the margin decline.
The analyst noted that while Tesla’s automotive segment may show weakness, its energy division had a record second quarter in deployments with improving margins, which could help mitigate the impact on overall performance. Despite the potential for near-term headwinds and stock pressure, the analyst acknowledged Tesla’s dominant position in the global electric vehicle (EV) transition and the emergence of software-defined vehicles.
The report highlighted that Tesla’s fundamentals may receive greater attention, potentially impacting its stock performance in the short term. Tesla stock rallied recently, but investors may have overlooked near-term challenges. Nevertheless, Barclays remains optimistic about Tesla’s long-term prospects due to its volume trajectory and dominant position in the EV market.
Other Analyst Updates on Tesla
Meanwhile, Tesla has been the subject of multiple analyst updates. Global Equities Research raised its price target for the electric vehicle manufacturer to $400, citing a surge in demand for the Model 3 and Model Y vehicles.
Citi also increased Tesla’s price target to $274, attributing the adjustment to upcoming electric vehicle and autonomous vehicle catalysts. However, UBS downgraded Tesla’s stock rating from Neutral to Sell, despite raising the price target to $197, due to concerns over Tesla’s valuation, particularly about its investments in artificial intelligence.
Tesla (NASDAQ: TSLA) Stock Price Action
As of 08:41 a.m. (Eastern Time) Thursday, TSLA stock traded at $252.93, marking a 1.78% increase compared to the previous trading session.
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