CFRA Raises Tesla Price Target and Reiterates Buy Rating

CFRA has raised its target price on Tesla Inc (NASDAQ: TSLA) to $560 from $450, maintaining a Buy rating. The revision comes amidst expectations that Tesla's earnings will further benefit from the cancellation of Federal tax credits for electric vehicle makers.

New Target Price and EPS Estimates

The new price target indicates an upside of over 16% from Tesla’s closing price on Tuesday. Additionally, CFRA has increased its 2025 EPS estimates to $3.10 from $3.00, and $4.00 from $3.75 for 2026. The cancellation of federal EV tax credits is anticipated to significantly impact Tesla’s competitors rather than Tesla itself.

Revenue Generation through Regulatory Credits

This situation is expected to enhance Tesla’s revenue through sales of regulatory credits, particularly under California’s Zero-Emission Vehicle program, which have previously been critical to its earnings.

Recent Market Changes

This upgrade is CFRA’s second in a week and comes as Tesla's market valuation sharply increased following Donald Trump’s victory in the 2024 presidential elections.

Tesla CEO Elon Musk is likely to play a significant role in the upcoming Trump administration, potentially streamlining regulatory approvals for Tesla's autonomous driving initiatives. Trump’s administration intends to abolish tax credits for electric vehicles.