Tesla's valuation could 'far exceed' current levels, RBC Capital Markets says

CNBC

4 days ago

Tesla has big shoes to fill in robotics and driving software and is making significant progress in those goals, according to RBC Capital Markets. The investment firm maintained its outperform rating on the electric vehicle stock while lifting its price target by $4 to $325, which analyst Tom Narayan said incorporates Tesla's 2026 valuation and global humanoid robot penetration estimates. Narayan's new price target suggests shares are fairly valued, as the stock last closed at $325.59 per share. Shares are down more than 19% year to date. "Should Tesla be successful on all of its goals, its valuation could far exceed even current levels. The Austin robotaxi launch has been better than many feared and the company is looking to expand in more cities," Narayan said in a Monday note to clients, adding that "regulatory hurdles remain, however ... we expect the end of IRA credits and high levels of used EV inventory to pressure the auto business for the next several quarters." Narayan pointed to Tesla's $300 million tariff-related impact in the second quarter, stemming from headwinds in its cars and energy business. TSLA 1Y mountain Tesla stock performance over the past year. Looking ahead, Narayan is bullish on Tesla's robotaxi expansion, although he believes the company's goal to reach half of the U.S. population by year-end is a "stretch target." Tesla recently expanded its robotaxi operating region in Austin, Texas , and is testing the service in Nevada and the San Francisco Bay Area among other locations. He's also betting big on Tesla's humanoid robots efforts. "Management maintained its goal to reach 1M units per year in less than 5 years. The prototype of its Optimus 3 will be ready by the end of this year and SOP still start next year," Narayan said in the note. "Our model only assumes this business will be used for manufacturing jobs. The reality is should these be used for home/retail purposes, the potential upside could be far greater than any other Tesla business." Narayan remains watchful of Tesla's full-self driving V.12 updates, which he said has driven a 25% increase in adoption rates. The company's supervised FSD remains to be approved in the EU and China, he said.