Upgraded from 'Neutral' to 'Buy'
"Low-priced new car launches, layoffs as stock catalysts"
Bank of America (BofA) has upgraded its investment rating on Tesla from 'Neutral' to 'Buy' following Tesla's announcement of plans to expand the launch of low-priced electric vehicles.
On the 24th (local time), BofA stated that it is maintaining Tesla's 12-month target price at $220, indicating that Tesla's stock price has about a 50% upside potential from the previous day's closing price of $144.68.
BofA analyzed that Tesla's faster-than-expected launch of low-priced new vehicles, the upcoming RoboTaxi reveal in August, and recent cost reductions due to layoffs will act as positive catalysts for the stock price.
In an investor memo released that day, BofA evaluated, "The Q1 earnings and management commentary addressed investors' main concerns and revitalized expectations for growth."
This upgrade in BofA's investment rating came after Tesla announced its Q1 earnings the previous day. Tesla reported Q1 revenue of $21.3 billion, down 9% year-over-year, and net income of $1.13 billion, down 55% over the same period. Adjusted earnings per share (EPS) were $0.45. These figures fell short of analyst expectations (revenue of $22.15 billion, adjusted EPS of $0.51). Tesla CEO Elon Musk stated after the earnings release that production of a new low-priced electric vehicle model would begin by early 2025. The market focused more on the plan to launch the low-priced new vehicle than on the earnings that missed expectations.
Meanwhile, as of 10:43 a.m., Tesla's stock price was trading up 12.5% compared to the previous trading day.
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