Tesla Energy is gaining more credibility from analysts in stock breakdowns

2024.08.16 3 min read

Tesla Energy is starting to gain some more credibility from Wall Street analysts as their stock breakdowns (NASDAQ: TSLA) are factoring in the company’s lesser-acknowledged division after several strong quarters this year.

Tesla is widely known as an automotive company, but many investors, analysts, and even reporters tend to leave out the fact that it also operates an energy division.

Many consider Tesla to be an artificial intelligence and software company as well.

Tesla bears officially have their next big threat: Tesla Energy

However, Tesla Energy is becoming a bigger factor in the synopsis of the stock as analysts are beginning to adjust how much it makes up of their overall price targets. Ben Kallo of Baird said in a note on Thursday that Tesla’s growth in the energy division warrants a revisitation of what it means to shares as a whole.

Kallo wrote:

“Rapid growth in deployments and gross margins exceeding those of the Automotive business have begun shifting attention to this component of the company and raised the question of the Energy segment’s contribution to TSLA’s valuation.”

Baird believes Tesla Energy equates to roughly $41 per share and assumes roughly 25 percent gross margins and around 12 percent EBIT margins, according to MarketWatch.

These assumptions run through 2029.

Additionally, Kallo wrote that Energy is “one of the most under-the-radar aspects of the broader business,” truly pushing the idea that Tesla has a silent giant looming in the background.

Interestingly, Morgan Stanley analyst Adam Jonas did the same thing last month, breaking down the Energy division’s impact on the price target the firm had.

Jonas moved the Energy division’s slice of the $310 price target from $36 to $50 per share.

Tesla reported such strong numbers for its energy division in Q2 that analysts are finally starting to take notice. The company reported that it deployed 9.4 GWh of energy storage products in Q2, which was its highest quarterly deployment to date, outpacing the previous record by 132 percent.

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