Benchmark Reaffirms Tesla (TSLA) Stock as ‘Top Pick,' Hikes Price Target on Robotaxi Optimism
Impressed with Tesla's (TSLA) robotaxi launch, Benchmark boosted the price target for the electric vehicle (EV) maker to $475 from $350 while maintaining a Buy rating. Also, Benchmark reaffirmed its 'Top Pick' status on TSLA stock, noting the 'successful launch' of the company's robotaxi service in Austin. The new price target indicates about a 46% upside potential from current levels and is based on a valuation of 53.9x 2028 EBITDA estimate, reflecting a premium to tech peers trading at 27.1x.
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TSLA stock is down more than 19% year-to-date due to concerns over weak demand amid intense competition and macroeconomic challenges.
Benchmark Analyst Is Optimistic About Tesla's Robotaxi
Benchmark analyst Michael Legg believes that while limited, Tesla's robotaxi launch in Austin reflected 'a controlled and safety-first approach.' The 4-star analyst added that impressing regulators and gaining a favorable public opinion are crucial, as they will enable the company to rapidly scale up its robotaxi service. Legg noted that new regulations for autonomous vehicles (AVs) are scheduled to take effect on September 1 in Texas, which he believes will further help win trust and drive expansion to additional cities.
Legg contended that while Alphabet's (GOOGL) Waymo has a lead in the autonomous ride-hailing market, with operations in four cities and around 250,000 weekly rides, Tesla's approach is more scalable. He also pointed out the higher cost of Waymo's vehicles compared to Tesla's Model Y.
The analyst highlighted that Tesla ended Q1 2025 with $37 billion in cash and generated over $600 million in free cash flow, which establishes that the EV maker has 'plenty of fresh powder' to invest in growth opportunities. Overall, Legg is bullish on Tesla's prospects and thinks that the Elon Musk-led company is 'undergoing an evolution from a trailblazing vehicle OEM [original equipment manufacturer] to a high-tech automation and robotics company with unmatched domestic manufacturing scale.'
Expectations from Tesla's Q2 Deliveries
Several Wall Street analysts have recently expressed concerns about Tesla missing Q2 deliveries expectations. However, Legg believes that the expected decline in TSLA's Q2 deliveries is priced into the stock. He added that a rebound is expected in the second half of 2025.
Meanwhile, RBC Capital analyst Tom Narayan expects Tesla to deliver 366,000 vehicles in Q2, below the FactSet consensus of around 390,000 EVs. The 4-star analyst expects Q2 deliveries to increase sequentially due to the availability of the refreshed Model Y and plants operating at greater capacity. Narayan has a Buy rating on Tesla stock with a price target of $307.
Is Tesla Stock a Buy or Sell?
Wall Street has a Hold consensus rating on Tesla stock based on 14 Buys, 12 Holds, and nine Sell recommendations. The average TSLA stock price target of $291.31 indicates 10.6% downside risk from current levels.
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