🤯 Have you seen our AI stock pickers’ 2024 results? 84.62%! Grab November’s list now.Pick Stocks with AI

Wells Fargo cuts price target on Tesla ahead of 3Q earnings report

EditorAmbhini Aishwarya
Published 09/10/2023, 13:58
© Reuters.
TSLA
-

Wells Fargo reiterated an Equal Weight rating on Tesla Inc (NASDAQ:TSLA) and cut their 12-month price target on the stock to $260.00 (From $265.00) ahead of the electric automaker’s 3Q report scheduled for October 18th.

The company announced third-quarter deliveries of 435,000 vehicles, which fell approximately 20,000 units short of the consensus estimate. Management attributed this shortfall to plant downtime during the Model 3 refresh.

Wells Fargo predicts that as a result of these lower delivery volumes and ongoing price reductions, the automotive gross margin (excluding credits) for the third quarter is expected to be 16.3%, compared to the consensus estimate of 17.9%.

Furthermore, Wells Fargo anticipates that third-quarter average pricing will decrease by 20% from its highest levels, and the automotive gross profit per unit (excluding electric vehicle credits) will be halved compared to its peak.

To achieve 1.8 million deliveries in the fiscal year 2023, TSLA will need to deliver around 475,000 units in the 4Q, requiring the near-maximum utilization of its global production capacity. While the refreshes for the Model 3 and Model Y, as well as the potential rollout of the Cybertruck with reportedly 1.9 million preorders, could stimulate demand, Wells Fargo analysts have reservations about whether these factors alone will be sufficient.

“We see higher near-term delivery growth driven by recent price cuts. However, we are cautious on hitting margin targets, and we see the risk of more price cuts later in the year,” wrote the analysts in a note.

Wells Fargo lowered 2023 EPS estimates from $3.20 to $2.95 to reflect price cuts and lower deliveries. 2024 estimates were cut from $3.55 to $3.25, 2025 estimates from $3.75 to $3.60, and 2026 estimates from $4.30 to $4.20 on lower pricing.

Shares of TSLA are down 1.82% in premarket trading Monday morning.

 
 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.