Tesla Faces Mixed Analyst Sentiment as BNP Paribas Exane Initiates Coverage with 'Underperform' Rating

Despite a recent surge of positive news for Tesla, including record quarterly deliveries and advancements in its Full Self-Driving (FSD) software, not all analysts are optimistic. BNP Paribas Exane has initiated coverage of the electric vehicle giant with an "Underperform" rating, introducing a note of caution amidst broader bullish sentiment on Wall Street.

Key Takeaways

• BNP Paribas Exane initiates Tesla coverage with an "Underperform" rating.

• Other analysts have recently raised price targets for Tesla, citing strong deliveries and FSD progress.

• TD Cowen and Stifel have issued 'Buy' ratings and increased price targets.

• UBS maintains a 'Sell' rating but raised its price target, citing AI and autonomy potential.

Analyst Divergence on Tesla's Outlook

In contrast to the generally positive analyst reactions, BNP Paribas Exane's decision to start Tesla coverage with an "Underperform" rating stands out. This move suggests a more cautious outlook from the financial institution, potentially signaling concerns about the company's valuation or future growth prospects that differ from the prevailing market optimism.

Bullish Signals from Other Analysts

Several other financial institutions have recently expressed a more bullish stance on Tesla. TD Cowen, for instance, significantly increased its price target for Tesla shares from $374 to $509, maintaining a 'Buy' rating. This optimism is attributed to Tesla's robust third-quarter delivery report and the company's commitment to ensuring CEO Elon Musk's compensation package, which is seen as a factor in retaining his leadership.

Stifel also revised its price target upward, from $440 to $483, highlighting the significant improvements in Tesla's Full Self-Driving (FSD) suite. The rollout of FSD v14.1 has been noted as a major step forward, with expectations of further enhancements. Stifel's analysis values Tesla's FSD suite at $213 per share, with additional potential from Robotaxi and Optimus, positioning Tesla as a key player in AI and autonomous driving.

Cautious Optimism from UBS

Even firms that remain cautious have adjusted their outlooks. UBS, while holding onto its 'Sell' rating, did raise its price target from $215 to $247. The firm cited positive delivery numbers and the potential value derived from AI and autonomy as reasons for the adjustment. However, UBS also expressed caution regarding potential risks in the fourth quarter and uncertainties surrounding future delivery figures.

Despite these differing opinions, Tesla shares have seen a notable increase, rising 24 percent in the last month, reflecting the ongoing market interest and speculation surrounding the company's future.