Goldman Sachs names Tesla a top stock pick for 2022, hikes price target

Published Mon, Jan 10 20226:11 AM ESTUpdated Mon, Jan 10 20227:31 AM EST

Electric vehicle innovation will continue to drive growth for investors in 2022, according to Goldman Sachs. The firm named EV incumbent Tesla as one of its top stock picks for the new year. "We believe that Tesla, given its leadership position in EVs (including its vertical integration and tight coupling of hardware and software, as well as its ecosystem of charging stations and brand), and its focus on clean transportation more broadly (given its solar and storage businesses) will be best positioned to capitalize on the long-term shift to EVs," Goldman's Mark Delaney said in a note Sunday. Goldman raised its price target on Tesla to $1,200, which is 16.85% higher than the stock's closing price Friday. The firm maintained its buy rating on the name. The shares were off 1.2% in premarket trading Monday. Vehicle demand should remain robust in 2022 relative to supply, allowing original equipment manufacturers like Tesla to maintain strong pricing, according to Goldman. However, the firm expects pricing to moderate over the course of the year, which could in turn flatten margins. "We'd focus on stocks that are best positioned for key secular growth drivers such as EVs and AVs/ADAS," Delaney said, referencing autonomous vehicles and advanced driver assistance systems. Tesla should expand margins soon as it ramps up its Model Y car and its new factories in Germany and Texas, according to Goldman. Growing software revenue should also lead to margin growth, the firm said. Tesla shares rallied 49.8% in 2021 but are down 2.8% so far this year. Goldman also named General Motors a top pick for 2022 for its leadership in the autonomous driving space. "We believe ADAS represents an important margin opportunity for OEMs, and we view GM as a leader," Delaney said. "We continue to believe the company is positioning itself well to capitalize on the shift to electric and autonomous vehicles in the long-term." Goldman has a buy rating on GM and a $72 price target, 15.6% higher than Friday's close. GM's share price rose 40.8% in 2021 versus the S & P 500's nearly 27% gain. Its shares also were down early Monday, losing 0.7% in premarket trading. — CNBC's Michael Bloom contributed reporting.

A Tesla Model 3 photographed in London, England, on May 16, 2019.

John Keeble | Getty Images News | Getty Images

Electric vehicle innovation will continue to drive growth for investors in 2022, according to Goldman Sachs.

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