Piper Sandler analysts have raised their price target on Tesla (NASDAQ:TSLA) stock to $310 from $300, reflecting improved delivery estimates and a lower weighted average cost of capital (WACC).
The revision is driven by higher vehicle deliveries, particularly for fiscal year 2024, where Piper Sandler now expects Tesla to deliver around 1.75 million units, up by 23,500 units from the previous estimate.
In Q3 alone, the firm predicts Tesla will deliver close to 459,000 units, marking a 5.4% increase year-over-year.
Analysts highlight that Tesla’s Q3 performance in China could be its best quarter ever.
“Unlike in other regions, it’s possible to track weekly registration data in China. As a result, we have high conviction that Tesla will deliver 175k+ units in Q3,” analysts wrote.
Elsewhere, while demand in Europe remains weak due to falling electric vehicle (EV) subsidies and broader macroeconomic challenges, Cybertruck deliveries are expected to support Tesla’s U.S. sales.
“In the U.S., intra-quarter sales figures are less accurate than they are in China, due to a reliance on third-party estimates. Nevertheless, thanks to Cybertruck, we think a q/q increase is doable,” the note states.
As for Tesla’s “Rest of World” regions, which typically account for 10% to 15% of the company’s total deliveries, is projecting this figure at 12% in Q3. However, based on past performance, Tesla could potentially surpass the current estimate of 55,000 units, analysts added.
They also point out a reduction in the WACC, now 13.3% compared to 13.5%. The analysts, however, caution that the focus on delivery numbers may be overshadowed by upcoming developments around Tesla’s robo-taxi program, which is scheduled for a major unveiling on October 10.
Piper Sandler reiterated its Overweight rating on Tesla stock. Potential risks to the firm’s thesis include potential production delays, customer dissatisfaction, or supply chain disruptions, the note says.
