Tesla stock is this bank’s top pick. Why it can accelerate into 2026 and beyond.
Investors looking for a winning car stock may have to choose Tesla, according to Deutsche Bank analyst Edison Yu.
On Tuesday, Deutsche announced its automotive outlook for next year, and Tesla is one of Yu’s “top picks.” The auto business could underperform in 2026 amid loosening climate regulations in both the US and Europe and “intensifying” competition in China; but the prediction is more than that.
The focus will remain on artificial intelligence and Tesla’s ability to use advanced computing to develop humanoid robots and grow its robot-taxi business, which launched in June. “The macro is so much [economic] “If the regime does not change materially, we think investors will continue to look beyond the weakness in the auto business,” Yu added.
Tesla shares rose 0.6% to $448.13 in premarket trading, while S&P 500 and Dow Jones Industrial Average futures were down less than 0.1%.
Yu rates Tesla stock a buy and has a $470 price target on the stock. It values its auto business at $175 per share, Tesla’s fixed energy business at $34 per share, robot taxis at $148 per share, robots at $111 per share, and other services and businesses at $2 per share.
The value of the robot business is 22.5 times Yu’s estimated sales of $55 billion in 2035. It will take some time for bots to generate significant sales.
There is no clear consensus on Wall Street. Overall, 39% of analysts buy the stock, according to FactSet. The average Buy rating of stocks in the S&P 500 is approximately 55%. The average analyst price target is around $401, below where the shares are trading.
Wall Street price targets can generally be read in one of two ways. This is the price at which an analyst expects the shares to trade at some point in the future, usually within the next 12 months. Or it is a fair price to pay for a stock to obtain a reasonable return in the future. Most target prices are set above current stock prices. Only 3% of stocks in the S&P 500 are currently trading above the average analyst target price.
Tesla is one of them, but as always, it’s a little different from most stocks. It has always been controversial. The EV maker’s price targets range from $120 to $600 per share. The $480 difference is more than 100% of the current stock price; that’s two or three times the bull-bear spread for other major tech stocks.
Write to Al Root at allen.root@dowjones.com
