Tesla shares have broken off a seven-day rally. Goldman believes that there is now nowhere to go higher

Goldman Sachs has raised its target price target for Tesla, but its target price is still 6.5% below the current share price. The restrained position of the bank is explained by the fact that the main factor in the growth of quotations it considers the businesses of robots and self-driving cars, with which Tesla is still at the very beginning of its journey. Tesla shares fell 2% in trading on Thursday, interrupting a streak of growth that has lasted seven consecutive days and increased capitalization by 23%.

Goldman Sachs analyst Mark Delaney reiterated a neutral recommendation on shares of electric car maker Tesla, while raising their target price from $300 to $395, CNBC reported. However, even the new target still remained 6.5% below the closing price on Thursday, September 18.

According to the analyst, the increase in the target price is due to the "general increase in market multiples" as well as the company's growth rate, which "the business can sustain in the long term." The investment bank is also factoring in its forecast for earnings per share growth, CNBC writes.

At the trading on September 18, Tesla securities fell by 2.1% to $416.85. The papers thus interrupted their seven-day rally, during which they rose by 23%, Barron's calculated.

As Goldman Sachs notes, Tesla's stock will need to keep many of its promises and meet investor expectations if it is to continue to grow.

"If Tesla can take a disproportionate share in areas such as humanoid robotics and autonomous driving, then there may be upside potential relative to our valuation," Delaney said in a note quoted by CNBC. - However, if competition limits profitability (as is the case in the driver assistance systems market in China) or Tesla fails to deliver, a correction is possible."

Longer term, Delaney takes a more optimistic view of Tesla's stock performance, expecting earnings per share growth due to "greater contributions from autonomous driving systems and robotics." He estimates earnings in 2030 could reach about $20 per share, above the "middle-of-the-road scenario" of $7 to $9 per share.

He also expects vehicle deliveries in the third and fourth quarters of this year to exceed market expectations. Tesla previously reported a 14% drop in deliveries in the second quarter, its second consecutive year-on-year decline.

"We attribute the volume improvement in the second half of the year partly to the launch of the [six-seat] Model Y L [in the Chinese market], partly to slightly improved consumer survey data, and with the expiration of the electric vehicle purchase tax credit, which expires on September 30, 2025," Goldman said in a note.

Several factors influenced the growth of the automaker's shares. One of them was a Reuters report that Tesla settled a lawsuit in California related to its driver assistance technologies. Earlier in the week, investors were enthusiastic about Elon Musk's $1 billion purchase of Tesla shares after the company promised its CEO a nearly $1 trillion bonus late last week if he met certain milestones.

In addition, Tesla appears to be preparing to expand the launch of its robotaxi service in Las Vegas, Barron's notes. Additional support for stocks on Wednesday was provided by the Federal Reserve's decision to cut rates. This is a positive for automakers: cars are often purchased on credit, and lower rates mean more affordable monthly payments, the publication explains.

This article was AI-translated and verified by a human editor