Zinger Key Points
- Margins were a key highlight from Tesla's Q3 earnings report for analysts.
- Several analysts raise their price targets on the stock after being impressed with the report and Elon Musk's commentary on guidance.
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Tesla Inc TSLA beat earnings estimates and showed improving margins in the third quarter, along with a strong vehicle delivery outlook for 2025, which were among the highlights for analysts.
The Tesla Analysts:
- Piper Sandler analyst Alexander Potter reiterated an Overweight rating on Tesla with a $310 price target.
- Bank of America analyst John Murphy reiterated a Buy rating and raised the price target from $255 to $265.
- Cantor Fitzgerald analyst Andres Sheppard maintained a Neutral rating and raised the price target from $245 to $255.
- Morgan Stanley analyst Adam Jonas maintained an Overweight rating with a $310 price target.
- Wedbush analyst Daniel Ives maintained an Outperform rating with a $300 price target.
- Needham analyst Chris Pierce reiterated a Hold rating with no price target.
- Goldman Sachs analyst Mark Delaney maintained a Neutral rating and raised the price target from $230 to $250.
- Truist analyst William Stein maintained a Hold rating and raised the price target from $236 to $238.
- Stifel analyst Stephen Gengaro reiterated a Buy rating with a $265 price target.
- Oppenheimer analyst Colin Rusch maintained a Perform rating with no price target.
Piper Sandler on TSLA: Tesla CEO Elon Musk and the company disclosed more information than usual during the earnings call, Potter said in a new investor note.
"This was an unexpectedly good quarter in almost every way," Potter said.
The analyst said there's room for upside with Musk predicting 20% to 30% delivery growth in 2025, which could be helped by a new vehicle launch in the first half of the year.
"It's hard to be anything but optimistic following today's call."
Bank of America on TSLA: Stronger gross margins and lowering operating costs were highlights in Tesla's third-quarter results for Murphy.
The analyst raised earnings per share estimates after the earnings beat and company commentary.
"The bottom-line was that Tesla is charging up for the next wave of growth," Murphy said.
He highlighted in an investor note that the 2025 year is expected to see 20% to 30% unit volume growth, the start of production of the Cybercab, the launch of a public ride-hailing app, the start of Tesla Semi production, and several other catalysts.
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Cantor Fitzgerald on TSLA: Tesla confirming more affordable vehicle models in 2025 was the key highlight from the third-quarter earnings for Sheppard, who called this a "meaningful catalyst for the company."
While Tesla provided more details on the Robotaxi rollout and future plans, Sheppard said there are still no expectations on the initial fleet size or details on the timing.
"Overall, we continue to see future revenues from FSD and Robotaxi as fundamental to TSLA's bull thesis over the long term, but we remain neutral on valuation in the near-term," Sheppard said.
Morgan Stanley on TSLA: Tesla's underlying focus on lowering vehicle cost of goods sold per unit and scaling the in-house battery business are two key takeaways from the quarterly results that might be less noticeable, Jonas said in a new investor note.
"As investors struggle with the business model shift from auto to AI, this print reminds us growing the auto business profitably remains a high priority," Jonas said.
The analyst said the 2025 delivery growth depends on Tesla's ability to improve affordability with the next-gen vehicle launch.
"We get the sense that FY25 is shaping up to be a year where Tesla focuses its efforts on reducing costs largely within the confines of its existing manufacturing footprint."
Wedbush on TSLA: Strong margins and 2025 delivery guidance were highlights in the earnings report for bullish investors, Ives said in a new investor note.
"Last night Tesla delivered an early Christmas present for investors as the bulls got a monster margin rebound and surprisingly strong delivery outlook for 2025," Ives said.
He added that the strong margins helped against "the major overhang on the Tesla story" for the past year. A price war in China and softer electric vehicle demand sent margins lower in previous quarters, leading to concerns from investors and analysts.
"The highlight of the night was Tesla giving delivery growth for 2025 of 20%-30% vs. whisper Street numbers in the 10%-12% heading into the print."
Ives said Musk seemed confident on the call, highlighting several of the company's future growth plans.
"Last night was the first major step on this recovery path and we believe was a seminal quarter for Musk and Tesla to prove the doubters wrong with a very bullish forecast for 2025."
Needham on TSLA: Automotive gross margins were a "positive surprise" in the quarterly results, Pierce said in a new investor note.
"TSLA continues to use price as a lever to drive units, but q/q vehicle COGS improvements were ahead of ASP declines driving margin upside," Pierce said.
The analyst said the high price-to-earnings multiple, concerns about future margin consistency, and uncertainty about the timing of the Robotaxi venture are reasons to remain cautious and keep the Hold rating.
Goldman Sachs on TSLA: After the gross margin beat, attention could turn to FSD and vehicle delivery targets going forward, Delaney said in a new investor note.
"Skeptics will likely focus on the historical delays from Telsa on reaching its targets, although more positive investors may point to the increased specificity in Tesla's current FSD outlook," Delaney said.
The analyst said Tesla is well positioned for long-term growth with a strong leadership position in electric vehicles and AI.
Truist on TSLA: Tesla's earnings report and conference call left unanswered questions for Stein.
"Tesla delivers EPS upside on strong margin performance, but, where's the beef?" Stein said.
The analyst said there were minimal details on FSD and the 2025 new model and no details on the Optimus Bot.
"There were several items we could highlight as imperfect in the qtr, but they're much less important than the many unanswered questions."
Stifel on TSLA: Tesla's third quarter was positive with strong adjusted EBITDA, margins and company commentary, Gengaro said in a new investor note.
"We believe TSLA shares will react well to the strong 3Q24 performance, including stronger-than-expected automotive sales gross margins, and commentary from management," Genagro said.
While the report was positive, Gengaro said Tesla bears will likely focus on lower average sales prices for Tesla vehicles.
"We continue to believe TSLA is very well positioned for long-term growth."
Oppenheimer on TSLA: Strong automotive execution by Tesla could be buying time for artificial intelligence advancements, Rusch said in a new investor note.
The analyst said Tesla can benefit from its cost and technology leadership compared to other electric vehicle models.
"We see the company returning to growth and margin expansion," Rusch said.
One key question from the analyst is whether Tesla can leverage its data, cost, and scale advantages going forward.
TSLA Price Action: Tesla stock is up 18.8% to $253.81 on Thursday, versus a 52-week trading range of $138.80 to $271.00. Tesla stock is up 2% year-to-date with Thursday's gains.
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