What 3 Tesla Analysts Are Watching For In Q2 Earnings Report

Tesla, Inc. TSLA is expected to report second-quarter earnings following the market close Monday, July 26.

In anticipation of this earnings call, analysts at Barclays, Credit Suisse, and Wedbush Securities provided insight into their expectations. Consensus estimates call for Tesla's second-quarter EPS to come in at 96 cents. 

Barclay's Take On Tesla 

Despite a bearish stance on shares of Tesla, analyst Brian Johnson is expecting an earnings beat, raising EPS estimates for the quarter from 92 cents to $1.08.

The company is highly overvalued, though from conversations with investors, specifically bearish hedge fund managers, it seems many people are beginning to accept Tesla's lofty trading multiples, said Johnson.

Earnings and delivery reports will likely be critical drivers of movement in the company's share price, said the analyst.

Recent pricing increases are likely to outweigh cost pressures, helping to fuel profit improvement and an earnings beat, he said. 

The delay in the German plant opening could lead to increases in Chinese production and deliveries, as Tesla will likely ship European Model Ys from its China plant, Johnson said. 

With Bitcoin closing around $34,000 likely above Tesla's purchase price range of $32,000-$33,000, the company will probably not have to record an impairment, said the Barclays analyst.

The analyst has raised his second-half earnings and revenue estimates, though they still sit below the consensus.

Longer-term, the bank is still Underweight on Tesla, sticking with a $230 price target. 

Credit Suisse's Take On Tesla 

Credit Suisse analyst Dan Levy is also expecting an earnings beat, projecting second-quarter EPS at $1.34, according to the Thursday note. The analyst highlighted three themes for Tesla's upcoming earnings report.

First, the development of Tesla's Berlin and Texas plants should materially grow the company's installed capacity, said the analyst. The European plant is crucial for Tesla, as its success will set up Tesla's future in the economic region, he said.

Tesla should end 2021 with a unit capacity of 1.44 million units versus its current capacity of 1.05 million, Levy said. 

Second, gross margins should reach 25% (excluding credits) due to the company's price increases and lower than anticipated raw material cost inflation, the analyst said. 

Third, expected positive news on Tesla's full self-driving feature should lift the stock, he said. 

Longer-term, Credit Suisse remains Neutral on Tesla with an $800 price target. 

Wedbush Take's On Tesla

Analyst Daniel Ives is expecting EPS of 99 cents. Despite increasing EV competition, Chinese PR and safety issues impacting demand and a chip shortage, Tesla managed to deliver over 200,000 vehicles in the June quarter, indicating the strength of the company and its ability to accelerate market share, said Ives.

Points of focus for the second-quarter earnings call include a potential impairment charge due to Bitcoin price fluctuations, EV tax credit results, Berlin and Austin factory capacities and timelines, and updates on "much-anticipated battery technology improvements into 2022," said the analyst.

Looking ahead, Wedbush maintains its Outperform rating on Tesla with a $1,000 price target, mainly due to accelerating global adoption of EVs. 

TSLA Price Action: Tesla was down 0.91% at $643.38 at the close Friday.

Photo: courtesy of Tesla.