Tesla Inc TSLA reported record revenue, operating margins and free cash flow in the third quarter. The company missed analyst revenue estimates. On Thursday, The Street is reacting to the quarterly results — and adjusting price targets down.
The Tesla Analysts: Morgan Stanley analyst Adam Jonas has an Overweight rating on Tesla and $350 price target.
RBC Capital analyst Joseph Spak has an Outperform rating and lowered the price target from $340 to $325.
Mizuho Securities analyst Vijay Rakesh has a Buy rating and lowered the price target from $370 to $330.
Wedbush analyst Daniel Ives has an Outperform rating and lowered the price target from $360 to $300.
Needham analyst Vikram Bagri has a Hold rating and no price target.
Related Link: With Tesla's Q3 Topline Miss In Rear View, Next 2 Quarters Will Reassure Investors On EV Maker's Long-Term: Analyst
The Tesla Takeaways: Jonas called Tesla’s third-quarter financial report “a clean 3Q earnings beat.” The analyst noted the beat came with several headwinds in the quarter.
“We wish FY23 consensus would allow more room for macro uncertainty,” Jonas said. “We were prepared for an earnings miss from Tesla. Didn’t happen.”
Spak said investors might be too focused on a miss on gross margins from Tesla in the third quarter and overlooking other big picture items.
“Mid-term, we aren’t too worried about demand, see path back to 30% GM, and believe TSLA an IRA (Inflation Reduction Act) winner,” Spak said.
The analyst said Tesla notes it is guiding for just under 50% grown for the current fiscal year for deliveries.
“Long-term, TSLA sees no demand issues and a positive trend with being able to hit 50% production growth/year on average.”
Rakesh lowered the price target on Tesla shares after the third-quarter earnings report with a sightline to “solid production ramp and stable profitability.”
“We believe Tesla remains well positioned, with Gigafactory Berlin at 2000/wk Model Y, and Texas production reaching 2000/wk ‘soon,’ as well as the beginning of production for Tesla Semis in December,” Rakesh said.
The analyst said investor concerns are less about production, profitability and execution and more on Europe and the health of the consumer.
Ives said the third quarter was a “respectable performance” given the difficult issues like the supply chain.
“The bullish narrative is clearly ‘hitting a rough patch’ as Tesla must now prove again to the Street that the robust growth story is running into a myriad of logistics issues as opposed to demand softening with EV competition coming all angles around the globe,” Ives said.
Ives said Tesla and CEO Elon Musk could be hitting a fork in the road and seeing a “moment of truth.”
“Musk was adamant on the call that demand remains strong globally and Tesla will sell every car it makes which should be in the 2 million unit range for 2023 in our opinion.”
Bagri called the third quarter earnings from Tesla “a mixed quarter” with several items beating analysts’ estimates and others falling shy.
“We expect the stock to be weak today (Thursday) as TSLA delivered a rare revenue and margin miss amid high expectations and demand concern,” Bagri said.
TSLA Price Action: Tesla shares were trading down 3.84% to $213.51 midday Thursday.
Read more here about Tesla's Bitcoin holdings in the wake of the automaker's third-quarter report.
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