Tesla is the Apple of energy, analyst says in new bullish call on the stock

By Emily Bary

A William Blair analyst likes Tesla's energy-storage offerings and thinks that business could get more attention while EV expectations are more muted

Tesla Inc.'s sprawling energy ecosystem is giving William Blair analyst Jed Dorsheimer shades of Apple Inc.

He initiated coverage of Tesla shares (TSLA) Thursday with an outperform rating, cheering the company's "'Apple-esque' ecosystem for the future of energy." That consists of "the auto business and longer-term opportunities like AI, robotaxi and robotics," he wrote.

Dorsheimer looked at Tesla's potential in an almost academic light, writing that Chief Executive Elon Musk's "ability to inspire" could improve the "societal value" of energy, which he sees as foundational for economic activity.

"If we look out at the horizon, fleets of robotaxis have the potential to improve utilization of vehicles and humanoid robots allow for reallocation of energy away from menial tasks," Dorsheimer said. Tesla is a technology powerhouse drawing parallels to Apple (AAPL), in his mind, when it comes to their respective focuses on ecosystems.

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While Tesla is best known for its electric-vehicle business, Dorsheimer joined the chorus of analysts who think the company's energy business deserves more attention on Wall Street. That business, consisting of products like the Megapack and Powerwall storage offerings, is "the most underappreciated component of the Tesla story," in his view.

"The three key drivers for energy storage are grid stabilization, the data-center buildout and renewables integration," he wrote. Further, investors could focus more on Tesla's energy business "in light of tempered EV expectations in the near term."

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Dorsheimer sees the Tesla energy business expanding at a compound annual growth rate of 50%, enough to increase its portion of the business mix substantially. Energy could make up 25% of revenue by 2028, relative to 6% today, by his math.

Tesla's stock is ahead 1.3% in premarket trading Thursday and looking to post its first gain in four sessions.

Analysts remain split on Tesla shares. Of the 57 tracked by FactSet who cover the stock, 23 have buy-equivalent ratings, 22 have hold-equivalent rating and 12 have sell-grade ratings.

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-Emily Bary

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08-29-24 0856ET

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