Investors looking for a winning car stock might just have to go with Tesla, according to Deutsche Bank analyst Edison Yu.
On Tuesday, Deutsche released its automotive outlook for the coming year and Tesla is one of Yu’s “top picks.” Its car business might underperform in 2026, amid easing climate regulations in both the U.S. and Europe and “intensifying” competition in China—but the forecast is about more than that.
The focus will remain on AI and Tesla’s ability to use advanced computing to grow its robo-taxi business, launched in June, and develop humanoid robots. “To the extent that the macro [economic] regime doesn’t change materially, we think investors will continue to look beyond weakness in the autos business,” added Yu.
Tesla stock was up 0.6% in premarket trading at $448.13, while S&P 500 and Dow Jones Industrial Average futures were down less than 0.1%.
Yu rates Tesla stock Buy and has a $470 price target for the stock. He values the car business at $175 a share, Tesla’s stationary power business at $34 a share, robo-taxis at $148 a share, robots at $111 a share, and has a $2 value for other services and businesses.
The robot business is valued at 22.5 times Yu’s estimated 2035 sales of $55 billion. It will take a while for bots to generate significant sales.
There isn’t a clear consensus on Wall Street. Overall, 39% of analysts covering the stock rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target is about $401, below where shares are trading.
Wall Street price targets can typically be read in one of two ways. It’s a price at which an analyst expects shares to trade in the future, typically at some point over the coming 12 months. Or it’s a fair price to pay for a stock to earn a reasonable return in the future. Most target prices are set above the current stock prices. Only about 3% of the stocks in the S&P 500 currently trade above the average analyst target price.
Tesla is one, but as always, it’s a little different from most stocks. It’s always been controversial. Price targets for the EV maker range from $120 to $600 a share. The $480 gap is more than 100% of the current stock price, double or triple the bull-bear spread for other large tech stocks.
Write to Al Root at allen.root@dowjones.com