Tesla (NASDAQ:TSLA) shares climbed 2% in the pre-open trading session Tuesday after Mizuho (NYSE:MFG) Securities upgraded the electric vehicle maker's stock to 'Outperform' from 'Neutral' and significantly raised its price target. Analyst Vijay Rakesh cited several factors for the positive outlook, including regulatory tailwinds for autonomous driving, potential benefits from new Trump administration policies, and Tesla's competitive positioning in the electric vehicle market.
Rakesh's analysis points to a loosening autonomous driving regulatory framework, which he believes could provide more upside to Tesla's Full Self-Driving (FSD) and Robotaxi valuation. The analyst also highlighted the company's potential to outgrow the global light vehicle production (LVP) with a more profitable EV roadmap compared to its peers. Mizuho's sum-of-the-parts (SOTP) valuation implies a target of approximately $1.8 trillion for Tesla, or $515 per share, up from the previous target of $230. This new target is based on a multiple of roughly 15.5 times the firm's projected 2025 sales.
The upgrade comes amid expectations of a favorable alignment with the Trump administration's policies, which could benefit Tesla more than its competitors. Rakesh anticipates that Tesla's strong supply chain and balance sheet, along with potential new policies such as the sunsetting of U.S. EV lease credits, could position the company advantageously. He also suggests that Tesla's autonomous technology is advancing towards broad commercialization, estimating that Full Self-Driving could be approved at Level 4+ by 2025 in the U.S. and by 2027 in Europe.
Mizuho's valuation also incorporates Tesla's potential growth in humanoid robots, expecting the company to ramp up to 7.2 million units by 2040, which is significantly below Tesla's own expectations. Despite near-term headwinds such as European Union tariffs and the potential repeal of U.S. EV tax credits, Rakesh believes these challenges will be less impactful for Tesla compared to its peers.
Rakesh stated, "We see TSLA benefiting from favorable legislative exposure from CEO Musk's alignment with the Trump administration." This statement underscores the perceived synergy between Tesla's strategic direction and the current political landscape, which could facilitate the company's growth and market share gains.
Tesla's stock movement today reflects investors' optimism following the Mizuho Securities upgrade and the anticipation of favorable regulatory and legislative developments that could enhance the company's growth trajectory.
