Analysts Price Forecasts and Targets, Low Price Concerns

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By the team

Tesla (NASDAQ: ) is back in the analyst spotlight. Several brokerages weighed in on the electric vehicle (EV) giant and its recently announced price cuts. For some analysts, these moves indicate that Tesla is experiencing a slowdown in demand.

Jefferies cuts Tesla stock target

Analysts at Jefferies, a longtime Tesla supporter, reiterated their buy rating on the electric vehicle (EV) maker, but cut their price target by nearly 50% to $180 a month after cutting their 2023 revenue and earnings per share estimates.

Analysts estimate Tesla will ship 1.7 million EVs in 2023, while reducing its base margin to 24%. Revenue estimates for 2023 were cut 21% to $99.4 billion, while GAAP EPS was cut to $3.61, 17% below consensus.

“Our belief that Tesla is leading the industry towards a better business model remains intact, although the trajectory is more uneven than we would like. The revision of earnings is painful, but the low price brings the investment issue back to the core mission of leadership. reasonable price and efficient use of resources,” they said. they said in the note they sent to the client.

Analysts also reacted favorably to the appointment of insider Tom Zhu as the company’s No. 2, behind CEO Elon Musk.

Bernstein sees a huge demand problem

Similarly, Bernstein analysts cut their FY23 earnings per share estimate to $3.80 from $4.96 previously, well below the consensus estimate of $4.99. Analysts argue that the recently announced price cuts show that Tesla has a demand problem and “has a big impact on TSLA’s economics.”

“Note that price cuts in China have not generated significant demand growth. Our sensitivity analysis suggests FY23 EPS is between $3.20 and $4.50,” they said.

Analysts also say Tesla’s main challenge is to offer more EV models at lower prices.

“We don’t expect a new low-cost offering until 2025, when Tesla will face greater EV competition,” they said.

Overall, analysts remain “torn” on Tesla stock. They rate the EV giant as “underperform” despite a $150 price target per share, which represents a 23% upside from current levels.

“On the one hand, the stock is now trading close to DCF 2050 (~$120/share), investor sentiment is weak, and there may be a risk-limited downside to estimates if the consensus numbers are properly reset. That said, this is a substantial revision of the Consensus numbers. It’s unclear whether Tesla will still have demand issues later in the year.The recent demand issues also raise the question of whether the long-term forecast for Tesla’s market share and margins is too high, they concluded.

Goldman Cuts Earnings Per Share Estimates As PSAs Fall (EPA:)

Goldman Sachs analysts also downgraded earnings per share for FY23, citing lower average selling prices (PSAs). While they expected Tesla to lower prices, they were surprised by the magnitude of the discounts.

FY23 EPS is now estimated at $3.50 (up from $4.00) including share-based compensation (SBC). Excluding SBC, analysts see FY23 EPS at $3.95. As a result, the price target is raised to $200 per share from the previous $205.

“While the reduction in Tesla vehicle prices will likely lead to lower earnings, we expect it will help drive higher volumes, all things being equal. We see this as important to Tesla’s vertically integrated model. Tesla, especially the new as its factories likely offer attractive facility.economies of scale,” the analysts said in a note to clients.

Tesla shares rose nearly half a percent in Tuesday’s pre-open after closing Friday at $122.40.

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