Tesla shares rank among leading S&P 500 gainers Tuesday after a bullish Deutsche Bank initiation
Tesla Inc. is far more than a car company, and that has Deutsche Bank analyst Edison Yu thinking differently about how to value the stock.
"At the core, we do not see Tesla (TSLA) as an automaker but rather a technology platform attempting to reshape multiple industries, deserving of an unique type of valuation framework," Yu wrote.
He initiated coverage of Tesla shares with a buy rating and $295 target price on Tuesday, advising that investors look past "temporary" softness in delivery and margin trends.
The stock is up about 3% in morning action and ranking among leading S&P 500 SPX gainers for the day.
Yu said his "unique" valuation approach is a "multimodal" sum-of-the-parts analysis that brings together Tesla's four big themes. These are automotive, energy storage, humanoid robots and robotaxis.
On the automotive side of the business, Yu expects 4 million deliveries by 2030. He applies an 8x multiple of enterprise value to revenue that's akin to what is used for Apple Inc.'s (AAPL) revenue multiple, "due to similar brand appeal and reach."
Yu said that investors well understand current pressures on the electric-vehicle market, but he sees room for Tesla's trends to improve in 2025, thanks in part to a refresh of the Model Y Juniper in China and a ramping Cybertruck business.
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Plus there's the potential for introductions. "Our read is there will be a new entry level car ('Model 2' or hatchback) and by not relying entirely on a new platform, Tesla can bring such a car more quickly to market," Yu wrote.
For energy storage, he borrows from Enphase Energy Inc.'s (ENPH) 25x multiple of enterprise value to earnings before interest, taxes, depreciation and amortization.
"The energy-storage business is already undergoing a major growth/margin inflection," which could result in upwards of $13 billion in 2025 revenue, according to Yu.
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In terms of Tesla's humanoid robot ambitions, he assumes the company has 200,000 robots at a $50,000 average selling price by 2035. Thus, he applies a multiple similar to Nvidia Corp.'s (NVDA) for this portion of Tesla's business, given the focus on artificial intelligence.
"In our framework, we see humanoid robotics as a critical part of the long-term solution to address two major structural issues: labor mismatch/shortage (and inflation) in the U.S./Europe and unfavorable demographic trends in Asia (mainly Japan and China)," he wrote.
Then there's the robotaxi business. For that, Yu's model assumes a fleet of about 1 million vehicles by 2035, as well as additional revenue from licensing to large carmakers. That gets an Nvidia-like multiple as well.
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The lion's share of Yu's $295 price target - $195 - comes from automotive expectations. He ascribes a $53-a-share value to the energy business, a $22-a-share value to the humanoid robot business, a $24-a-share value to the robotaxi business and an extra $1-a-share value to services and other miscellaneous areas.
-Emily Bary
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