Buy Tesla's stock ahead of these 'significant' positive catalysts, analyst says

By Tomi Kilgore

Baird sees Q3 deliveries well above expectations given upbeat third-party data and lack of factory downtime

Shares of Tesla Inc. have been on a tear in September, and Baird analyst Ben Kallo expects more gains are to come after the electric vehicle giant reports deliveries data next week.

And about a week after that, he sees the Robotaxi Day as an even bigger potential positive catalyst.

"The near-term setup is favorable in our view, and we are buyers into both the deliveries released (estimated Oct. 2) and robotaxi event (Oct. 10)," Kallo wrote in a note to clients.

He reiterated his outperform rating on the stock and his $280 price target.

Tesla's stock (TSLA) tacked on 0.2% in morning trading Wednesday. It has soared 19% so far in September, which puts it on track for the best month since it climbed 19.5% in November 2023.

Kallo said he believes delivery numbers are trending "positively," based on insurance registrations in China, checks on third-party data points and given the absence of any factory downtime during the quarter.

He's modeling for third-quarter deliveries of 480,000, up 10.3% from 435,000 in the same period a year ago, and well above the current FactSet consensus of 462,000.

For 2024, Kallo expects deliveries of 1.83 million, also above the FactSet consensus of 1.78 million.

But even if the release comes up a bit shy, he believes investors should continue to buy the stock.

"[W]ith the robotaxi unveil event shortly after the estimated deliveries date, we speculate that even an in-line or weaker deliveries number would be viewed by investors as a look through with a significant potential catalyst coming soon after," Kallo wrote.

Read: Tesla's stock has beaten the S&P 500 lately. Here's what could drive more gains.

He expects Tesla to unveil a lower-cost EV during the event, which the company will be able to manufacture on existing factory lines. He believes an unveiling would be consistent with comments about initial deliveries in the first half of 2025.

While there are likely to be "puts and takes," Kallo believes a lower-cost vehicle would boost the outlook for the stock.

"We see the launch of a lower-priced vehicle as a positive for volume estimates in 2025, however, we note that switching production to enable a new vehicle would likely come with some factory downtime which may create lumpiness in deliveries," Kallo wrote.

Tesla's stock has run up 36% over the past three months, while the Global X Autonomous & Electric Vehicles ETF DRIV has lost 3.7% and the S&P 500 index SPX has tacked on 4.9%.

-Tomi Kilgore

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

09-25-24 1032ET

Copyright (c) 2024 Dow Jones & Company, Inc.