Tesla’s Stock Target Uplifted at Piper Sandler

Piper Sandler analysts have recently updated their view on Tesla's stock (NASDAQ:TSLA), signalling greater confidence in the electric vehicle (EV) manufacturer's growth prospects. The firm has increased its price target for Tesla's stock from $300 to $310 alongside an Outperform rating. This revision appears to be driven by a combination of improved delivery estimates for the company's vehicles and a reduction in Tesla's weighted average cost of capital (WACC).

The new estimates suggest that Tesla is on track to exceed its delivery numbers significantly. Piper Sandler now forecasts Tesla to deliver approximately 1.75 million units in the fiscal year 2024. This estimate is an uptick of 23,500 units compared to previous expectations. Focusing on the nearer term, Piper Sandler predicts robust delivery figures for the third quarter of the current fiscal year. The firm anticipates Tesla will deliver close to 459,000 units in Q3, representing a 5.4% increase year-over-year.

Tesla's presence in China is a major contributor to the bullish outlook, with expectations set for the upcoming Q3 to be the company's most successful quarter to date in the region, with more than 175,000 units expected to be delivered. Despite a tepid demand in Europe, Tesla's U.S. sales are presumed to be bolstered by the highly anticipated Cybertruck deliveries. Moreover, sales in the Rest of World regions are projected to contribute 12% to Tesla's total deliveries in Q3.

Opening up another avenue for growth, Tesla's robo-taxi program is expected to grab headlines with a major unveiling on October 10, which may also divert some focus from delivery numbers. With these delivery number improvements, there's also been a positive adjustment in Tesla's financial model. The WACC, a key metric used in corporate finance to evaluate investment decisions, has been reduced for Tesla to 13.3%. Lower WACC can indicate a less risky perception of the company and can affect the valuation positively.

Despite the optimistic outlook, potential risks have not been overlooked. Concerns continue to loom regarding production delays, potential customer dissatisfaction, or disruptions in the supply chain, all of which could impact the company's performance adversely.

With a new price target and heightened delivery estimates, Piper Sandler's analysis reflects growing trust in Tesla's operational capabilities and market strategies. As Tesla heads towards an important revelatory event for its robo-taxi program, investors and industry observers alike will be keeping a close watch on the company's progress against these forecasts.