On Wednesday, Mizuho Securities adjusted its expectations for Tesla Inc. (NASDAQ:TSLA), reducing the electric vehicle manufacturer's price target from $195 to $180. The firm maintained a Neutral rating on the stock despite the adjustment.
The decision follows Tesla's recent quarterly financial report, which showed revenue and earnings per share (EPS) that fell short of market consensus. Specifically, Tesla reported revenue of $21.3 billion and EPS of $0.45, compared to the anticipated $22.3 billion and $0.52, respectively.
The automaker's automotive gross margins, excluding regulatory credits, were reported at 16.4%, which is below the consensus figure of 17.7%. A year-over-year decrease in the average selling price (ASP) of Tesla's vehicles was noted, though this was somewhat mitigated by improved costs per vehicle. Tesla did not guide expected vehicle volumes for 2024 but indicated that sales are projected to increase year over year.
Despite the lack of detailed volume guidance, Mizuho expressed concern over Tesla's short-term prospects, noting that deliveries in the month following the quarter's end were down approximately 9% year over year. The firm also pointed to potential difficulties Tesla may face in the upcoming June quarter, given the current slowdown in electric vehicle demand.
These challenges are juxtaposed against the potential availability of cheaper Tesla models, which are now expected to come to market late in 2024 or early 2025, a slight advancement from the previously anticipated second half of 2025.
In summarizing their stance, Mizuho reiterated their Neutral rating, citing Tesla's status as a global leader in the electric vehicle space. However, they also acknowledged the near-term headwinds faced by the company, including a weakening electric vehicle market outlook and pricing pressures. The revised price target reflects these concerns and the firm's adjusted estimates for Tesla's performance.
InvestingPro Insights
As Tesla navigates through the challenges highlighted in its recent financial report, real-time data and insights from InvestingPro can offer additional context for investors. Tesla's market capitalization stands at a robust $461.4 billion, underlining its significant presence in the automobile industry. Despite a revenue growth of 18.8% over the last twelve months as of Q4 2023, the company's gross profit margin in the same period was 18.25%, which may raise concerns about cost efficiency and profitability.
InvestingPro Tips for Tesla suggest that while the company holds more cash than debt, indicating a strong balance sheet, it is trading at a high earnings multiple and P/E ratio relative to near-term earnings growth. These metrics, coupled with a high Price/Book ratio of 7.36, suggest that the stock is priced at a premium. Additionally, with 22 analysts having revised their earnings downwards for the upcoming period, investors may want to keep a close watch on earnings expectations.
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