Canaccord: 2025 - The Year of the Robot for Tesla

Canaccord Genuity has raised its price target for Tesla (TSLA) stock to $404, maintaining a 'Buy' rating despite weaker-than-expected deliveries in the fourth quarter. This new target represents around 40 times its adjusted EPS estimate for 2027, a high multiple that the broker justifies by expected revenue growth around twice that of other technology mega-cap companies. Canaccord's decision to maintain its bullish stance centers on new product introductions slated for 2025, which include the Cybertruck and Roadster, and the potential for improving margins in 2025. Additionally, Canaccord highlights advances in Tesla's Full Self-Driving (FSD) software and the potential in the robotics sector for Tesla, emphasizing 2025 as the "year of the robot."



In a recent note, Canaccord analyst George Gianarikas raised the firm's price target on Tesla to $404 from $298 and kept a Buy rating on the shares. The firm says that despite Tesla's weaker-than-expected Q4 deliveries, it is sticking with a Buy rating and raising the price target. The multiple implied by the new target is justified based on the multiples and growth rates of Tesla's comp set, which Canaccord deems to be a group of mega-cap tech stocks, including Alphabet, Amazon, Apple, Meta, Microsoft, and Nvidia, the analyst tells investors in a research note. The firm says this set of companies trades at a median of 23-times estimated 2027E earnings, but has a combined revenue growth rate half of Tesla's from 2025-2027. Longer term, Tesla also has a "generational set of growth opportunities ahead, including electric vehicles, autonomy, energy storage, and robotics," contends Canaccord. The firm acknowledges the limited upside implied by its new target but believes it is appropriate given the near-term volatility.



Canaccord's optimism is shared by industry experts who highlight Tesla's unique positioning to harness the economic boom spurred by the AI evolution, amidst a broader shift from infrastructure building to application deployment within AI. As AI becomes more integrated across various industries, Tesla's role is expected to expand further. Generative AI and advancements in AI video and coding signify new frontiers where Tesla's technologies can be leveraged. These developments, combined with the potential for an "awakening of vehicles as robotaxi beyond 200,000 vehicles," could drive profitability and consumer adoption in 2025.



In conclusion, Canaccord's new price target for Tesla reflects the firm's confidence in the company's long-term growth potential and upcoming product launches. The high multiple of 40 times its adjusted EPS estimate for 2027 is justified by the expected revenue growth around twice that of other technology mega-cap companies. Canaccord's emphasis on the "year of the robot" in 2025 highlights the potential in the robotics sector for Tesla, as well as the advances in the company's Full Self-Driving (FSD) software. As Tesla continues to innovate and expand its offerings, investors can expect a thrilling ride in the world of electric vehicles and robotics.