Morgan Stanley Cuts Tesla Second-Half 2019 Revenue Growth Forecast

Tesla Inc TSLA shares are up 4.6% in the past week on the strength of better-than-expected second-quarter delivery numbers, but one analyst said Monday that the strong numbers come at the expense of future quarters.

The Analyst

Morgan Stanley analyst Adam Jonas reiterated an Equal-weight rating on Tesla with a $230 price target. 

The Thesis

Tesla likely pulled third- and fourth-quarter demand forward into the second quarter to beat consensus delivery estimates, Jonas said in a Monday note. (See his track record here.) 

Despite the beat, Morgan Stanley is leaving its full-year 2019 deliveries estimate unchanged at 347,000 vehicles. Tesla exceeded Morgan Stanley’s second-quarter deliveries estimate by 13,622 units, so Jonas lowered the third-quarter deliveries estimate by 6,500 to 91,300 and the fourth-quarter estimate by 7,200 to 97,200. 

Tesla has guided for full-year deliveries between 360,000 and 400,000 and opted not to update its guidance after reporting the second-quarter beat.

In addition to lowering its second-half deliveries estimate, Morgan Stanley dropped its year-over-year revenue growth estimates to negative 3% in the third quarter and negative 2% in the fourth quarter due to negative impacts from model mix shift and margin erosion.

“While we still expect near-term volatility in the stock to be driven by real-time data points around demand in the U.S. and international market for Tesla’s electric vehicles, we also expect discussions around the nature and value of the company’s technology to be an important part of the narrative going forward,” Jonas said.

Price Action

Tesla shares were down 1.24% at the time of publication Monday and are now down 31% overall in the past six months.

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Photo courtesy of Tesla.