Tesla (NASDAQ:TSLA) has been on a tear over the past six months, with shares surging 96% since bottoming out in April. Bulls often argue that the real investment case lies in what Tesla will accomplish in the future – that it’s better to focus on the company’s disruptive ambitions than on its lofty valuation.
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That is also essentially the opinion of Melius Research analyst Rob Wertheimer, who has just initiated coverage of the EV leader with a Buy rating and $520 price target, implying the stock will gain 19% over the coming months. Wertheimer’s optimism is based on the expectation cars will achieve full autonomy – and Tesla will be a prime beneficiary. (To watch Wertheimer’s track record, click here)
“Our target assumes Tesla’s autonomy push is successful in passenger cars, converting a large share of the rideshare market to Tesla, and then expanding the market manyfold,” the analyst went on to explain.
Of course, says Wertheimer, there are “downside risks” – FSD (full self-driving) still isn’t fully autonomous, and it’s impossible to say whether true self-driving abilities will become a reality in six months or two years. “But the moment of change is here,” adds Wertheimer, believing the risk of non-exposure is also significant, as the analyst thinks there are few investment opportunities quite like Tesla.
All it takes, says Wertheimer, is seeing a driverless car pull up to understand that the world has “already changed” – though most people haven’t grasped it yet. For investors, it’s worth visiting California, Phoenix, or Austin just to witness it firsthand, with the analyst believing it’s the modern equivalent of watching the debut of the diesel engine at the World’s Fair a century ago. Wertheimer’s guess is that fewer than 1% of Americans have actually ridden in a driverless car.
Experiencing Tesla’s FSD, though still requiring supervision, offers a transformative experience compared with traditional driving. Back in January, Musk encouraged people to test it out on the latest hardware. “We did in August, and didn’t want to go back to regular assisted driving after only a couple days’ use,” explains Wertheimer. “The current iteration will be much better than that.”
Wertheimer concedes the technology isn’t ready for commercial taxi use yet – there are still reports of necessary interventions and occasional safety concerns. However, the rate of progress “continues to accelerate.” Improvements in hardware, off-vehicle computing, increased training data, and “faster iterative loops,” make it likely that Tesla will transform this space, leaving competitors well behind.
Interestingly, Wertheimer points out that he has never assigned a Buy rating while holding estimates below consensus, but says the outlook for 2026 and 2027 vehicle sales seem overly optimistic – up 16% and 17%, respectively. Q2 sales were down 16%, and Ford’s CEO recently warned that its EV sales could drop by as much as 50% as subsidies disappear. Musk, then, wasn’t exaggerating when he warned Tesla faces some tough quarters ahead.
“That said, Tesla isn’t valued as a car company,” Wertheimer added, which basically sums up the Tesla investment case accurately enough.
Others on the Street, however, aren’t quite as enamored with TSLA as Wertheimer is; the stock only claims a Hold (i.e., Neutral) consensus rating, based on 16 Buys, 13 Holds and 9 Sells. At $365.88, the average price target factors in a 12-month decline of 16%. (See TSLA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.