On Thursday, BofA Securities updated its outlook on Tesla (NASDAQ:TSLA) stock, increasing the electric vehicle maker's price target to $400 from the previous $350, while maintaining a "Buy" rating.
With Tesla's shares trading at $357.93 and near its 52-week high of $361.93, the adjustment reflects the firm's positive view on Tesla's ongoing development of its Optimus robot. According to InvestingPro data, Tesla has demonstrated remarkable momentum with a 104.53% return over the past six months.
The analyst from BofA Securities highlighted that Tesla is currently employing the Optimus robot to sort 4680 battery cells autonomously. Tesla is actively testing Optimus in a variety of scenarios, such as catching a tennis ball, to fine-tune the robot's design and functionality. The company has set a goal to produce 1,000 Optimus robots by the end of 2025, primarily for use in its own manufacturing facilities.
According to the analyst, the increased presence of robots like Optimus will likely expedite their training and enhance their capabilities. Although Optimus currently utilizes only a single-digit percentage of Tesla's computing power, expectations are that the resources allocated to Optimus will expand as Tesla's robotaxi technology advances.
This progression is anticipated to quicken Optimus's development and contribute to a surge in production starting in 2026, which could assist in reducing costs. With annual revenue of $97.15 billion and a market capitalization of $1.15 trillion, Tesla maintains its position as a dominant player in the automotive industry.
The report also suggested that the "Optimus opportunity," among others, could potentially gain from an infusion of capital through an equity raise. This would be aimed at boosting compute capacity, a move that, according to BofA Securities, would likely be received positively by the majority of Tesla investors.
The firm anticipates that such strategic investments would further enhance Optimus's capabilities, supporting Tesla's growth and cost reduction efforts in the coming years. Trading at a P/E ratio of 88.56, InvestingPro analysis indicates Tesla is currently trading above its Fair Value.
Investors seeking detailed valuation metrics and 22 additional key insights can access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Tesla has seen significant analyst attention and regulatory developments. Bernstein maintained its Underperform rating on Tesla, citing concerns over the company's strategic focus on the development of a dedicated 'Cybercab.'
Simultaneously, Roth/MKM upgraded Tesla's stock from Neutral to Buy, driven by growing enthusiasm for electric vehicles and a favorable regulatory environment.
Wedbush Securities also maintained an Outperform rating on Tesla, emphasizing the company's strong financial position and potential growth in the AI and autonomous driving space.
Tesla and JPMorgan Chase (NYSE:JPM) & Co. have mutually agreed to drop their ongoing lawsuit, centered around a 2014 stock warrant transaction and a tweet from Tesla CEO Elon Musk. Details of the settlement were not disclosed.
In technology advancements, Neuralink, co-founded by Elon Musk, has initiated the CONVOY Study, aiming to integrate brain-computer interface technology with an assistive robotic arm.
In regulatory developments, California Governor Gavin Newsom has announced plans to potentially reinstate the state's Clean Vehicle Rebate program. However, Tesla could be excluded from the new state rebates, a move that could impact the company's operations in the state. These are some of the recent developments impacting Tesla.
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