Piper Sandler reiterated its Overweight rating on Tesla Inc. and maintained a $400 price target, saying fears about a steep decline in the company’s emissions-credit revenue are exaggerated. The brokerage projects Tesla will earn roughly $3 billion from regulatory credits in 2025 and $2.3 billion in 2026, compared with about $3.5 billion last year—an amount that equalled the electric-vehicle maker’s free cash flow. Piper Sandler said the anticipated gradual drop should still provide meaningful support to margins and cash generation. The call lands ahead of Tesla’s second-quarter earnings report, scheduled for release after the market closes on Wednesday. Market estimates point to revenue of about $22.7 billion, earnings per share of $0.39 and vehicle deliveries of 384,000 units, all lower than a year earlier. Options pricing implies a swing of roughly 7.5% in the stock following the results.