William Blair: 'Increasingly difficult' to like Tesla stock amid rich valuation

Investing.com -- William Blair analysts said Tuesday they are raising their third-quarter delivery estimates for Tesla but warned that the stock’s lofty valuation makes it “increasingly difficult” to sustain a positive stance.

In a note ahead of Tesla’s October 2 results, the firm said the expiration of the $7,500 U.S. EV tax credit has led to a stronger-than-expected pull-forward in demand.

“We now estimate 480,000 deliveries versus the Street’s 443,000,” William Blair wrote, adding that U.S. demand for the new Model Y has been a “bright spot,” while a recovery in China and other markets has offset weakness in Europe.

Despite the upward revision, analysts expressed caution. “Next quarter we are cautious on margins from a hangover on auto deliveries and lower regulatory credit revenue,” they said.

Still, enthusiasm around Tesla’s robotaxi efforts, Elon Musk’s stock purchase, and new energy storage products has “pushed the stock to near all-time highs.”

The firm noted that Tesla shares are now trading at “an enterprise value of 118x our 2026 EBITDA estimate… a significant premium to technology peers at 20-25x.”

Analysts warned that the impacts from the OBBB could require “a reset to Street consensus as the multiple premium will be put under pressure.”

William Blair maintained its Market Perform rating but acknowledged that it is “finding it increasingly difficult to maintain” given the valuation backdrop.

The firm said it would look for “more data points on our bullish views on energy storage and robotaxi to regain momentum” once estimates reset, while citing risks from intensifying Chinese competition, geopolitical exposure to China, and “key-man risk with CEO Elon Musk.”

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