Sell Tesla Stock, Analyst Says. Why Shares Are Rising.

Tesla trading has been wild lately. The stock gained 6.2% for the week, after dropping 3.8% the prior week. (AFP via Getty Images)

Key Points

• Tesla stock increased, despite a new Sell rating and $307 price target from BNP Paribas Exane analyst James Picariello.
• Picariello estimates Tesla’s AI businesses, which generate no sales, account for 75% of its trillion-dollar-plus valuation.
• 45% of analysts rate Tesla stock a Buy, below the S&P 500 average of 55%, with almost one-quarter rating shares Sell.

Tesla stock rose to close another wild week of trading. A new Sell rating for Wall Street didn’t hurt at all.

Shares of the electric-vehicle maker added 2.5%, closing at $439.31, while the S&P 500 and Dow Jones Industrial Average each gained 0.5%.

Shares brushed off a new bearish call from BNP Paribas Exane analyst James Picariello. He launched coverage of Tesla stock on Thursday afternoon with a Sell rating and $307 price target.

Tesla’s two main AI businesses, robo-taxis and humanoid robots, don’t generate any sales, he said, but account for an estimated 75% of the current trillion-dollar-plus valuation. He is optimistic about AI, but the valuation implies “quite a lot.”

Picariello covers other car stocks. Historically, traditional car analysts have valued Tesla stock lower than technology analysts, who also cover Tesla stock. There is some good reason for that. Shares of car makers typically trade for single-digit price-to-earnings, or PE, ratios.

Picariello’s target, however, does value Tesla for about 150 times the estimated 2026 earnings. The problem is Tesla stock trades for north of 200 times earnings.

Overall, 45% of analysts covering Tesla stock rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. A new Sell rating, of course, doesn’t change the Buy-rating ratio much. Almost one-quarter of analysts covering Tesla stock rate shares Sell. The average Sell-rating ratio for stocks in the S&P 500 is closer to 10%.

Ratings show Tesla remains a controversial stock on Wall Street. So do analyst price targets. The difference between the top and bottom Tesla targets is about $460, more than 100% of the current stock price. That ratio for Apple stock is about 40%.

The average analyst price target for Tesla shares is about $370.

Coming into Friday trading, Tesla stock was up about 6% so far this year and up about 94% over the past 12 months.

Shares have been more volatile than usual lately. Coming into the week, they had moved an average of 2.7% up or down over the past 30 trading days. Shares moved more than 3% 13 times over that span.

Tesla stock gained 6.2% for the week, after dropping 3.8% the prior week.

Write to Al Root at allen.root@dowjones.com