Tesla's Megapack Battery Not as Valuable as Before, Says RBC Analyst

RBC Capital's Tom Narayan raised their price target on Tesla (NASDAQ: TSLA) by 0.3% from $297 to $298 on March 5, 2024. The analyst maintained their Buy rating on the stock.

Despite Tesla's Megapack battery being a positive, Narayan noted that its licensing penetration does not look as valuable as it used to be. RBC remains conservative on Tesla's car business, not giving credit to Model 2 affordability.

Narayan recently visited Tesla's battery storage facility and reported that they added $117 billion to their Tesla valuation, or $34 per share. However, the upside was partially offset by management's goal to increase volumes to sell autonomy, resulting in RBC cutting Tesla's car gross margins estimate from 18% in 2023 to 11% by 2035.

Currently, 55.6% of top-rated analysts rate TSLA as a Strong Buy or Buy, while 44.4% see it as a Hold. No analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that TSLA's upcoming year will deliver earnings per share (EPS) of $5.43. This would represent a 14.8% increase on a year-over-year basis.

Since Tesla's last quarterly report on December 31, 2023, the stock price has declined by 27.3%. Year-over-year, the stock is down 6.7%. During that same period, TSLA has underperformed the S&P 500, which is down 25.4%.

It's worth noting that RBC Capital analyst Tom Narayan is ranked in the bottom 9% out of 4,487 Wall Street analysts, with an average return of -7.6% and a 34.2% win rate. They specialize in the Consumer Cyclical and Financial Services sectors.

Tesla, Inc. designs, develops, manufactures, leases, and sells electric vehicles, as well as energy generation and storage systems globally. The company operates in two segments: Automotive and Energy Generation and Storage. The Automotive segment offers electric vehicles, automotive regulatory credits, non-warranty after-sales vehicle services, used vehicles, retail merchandise, and vehicle insurance. Tesla also provides purchase financing and leasing services, electric vehicle services, and vehicle warranties and extended service plans.

Tesla, Inc. was incorporated in 2003 and is headquartered in Austin, Texas.

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