BofA sees Tesla well positioned for growth in 2025

BofA Securities raised its price target on the automotive giant Tesla (NASDAQ:TSLA) on Thursday to $400 from $350 and maintained its Buy rating on the stock after a visit to its gigafactory in Austin, Texas.

“The trip gave us increased confidence that TSLA is well positioned to grow in 2025+ with its core EV business and launch of its robotaxi offering, and longer-term from its investments in Optimus,” said analyst John Murphy and team.

Additionally, TSLA has opportunities to improve margins, which today are mainly driven by hardware, but will shift more to margin-accretive software with growth in FSD, premium connectivity, and charging, the analysts added.

BofA noted that Tesla’s FSD would soon require an intervention only once every 10k miles, meaning that its technologies are near the point where Tesla could safely launch the (monitored) robotaxi business. This further compares with Waymo, which required an intervention every 17k miles.

Additionally, with Tesla planning to have 1k Optimus robots by the end of 2025 largely in its plant, BofA expects the Optimus opportunity could potentially benefit from more capital via an equity raise to fund greater compute capacity, a move to be favored by investors.

Since the start of the year, Tesla shares have risen about 44.1%. Seeking Alpha’s Quant and sell-side analysts have recommended the company as a Hold.