Tesla stock to hit $295? 1 Wall Street analyst thinks so.

Actions of adze (TSLA -0.29%) have tumbled over the past year due to weakening sales growth and concerns about its profitability amid growing competition in the electric vehicle (EV) market.

However, Deutsche Bank analyst Ed Yu believes investors should take advantage of the decline. Yu recently resumed coverage of Tesla, rating the stock a buy and giving it a price target of $295 — about 30% above current levels. Here’s why the analyst might be right.

Why Buy Tesla Stock?

Tesla plans to launch a more affordable model in the first half of 2025. This reflects the company’s ability to lower its production costs, an advantage that could go a long way toward further strengthening Tesla’s lead in electric vehicles .

Tesla stock has been weighed down by sluggish demand growth, but it reported a 15% quarter-on-quarter increase in deliveries in Q2, so demand appears to be improving. The company could build momentum for a new period of growth as it launches new models.

Most importantly, Yu sees Tesla as more of a technology platform than an automaker. It has made significant progress in the use of artificial intelligence (AI). Nvidia chips. Tesla’s lead in AI will set it apart from other automakers in the long run.

In the short term, the only thing investors need to see for the stock to bounce back is better upside growth. Tesla stock looks expensive by every measure, but it’s trading well within its historical range on a price-to-sales basis, meaning revenue growth will be key to more gains for investors. If EV demand continues to improve and sales growth returns in 2025, the stock could rise toward Yu’s price target over the next year.