Today, electric vehicle (EV) giant Tesla (NASDAQ:) is scheduled to release its earnings report, a key event that sheds light on the company's financial performance. Tesla is grappling with several challenges, and current sentiment towards Tesla stock is not optimistic.
Since the beginning of 2024, Tesla stock has experienced a significant decline, plummeting more than 43%. This downward trend was further exacerbated by a 3% decline in Monday's trading session.
Analyst consensus earnings per share forecast for the first quarter was $0.49. Analysts expect the company's revenue to be around $22.27 billion, indicating a possible decline from last year. Tesla's earnings per share for the first quarter of 2023 were $0.85, with sales of $23.3 billion.
Analysts at Deutsche Bank last week lowered Tesla's rating from “buy” to “hold” and lowered their price target from $189 to $123 per share. The investment bank highlighted the fact that it has been warning investors about downside risks to Tesla's deliveries, prices and earnings through 2025.
Meanwhile, Wells Fargo lowered its price target on Tesla from $125 to $120 in a recent note, telling investors it expects the Elon Musk-led company to miss consensus estimates for the first quarter. However, the investment bank noted that expectations are low at this point due to Tesla's weak first-quarter deliveries.
What analysts are paying attention to
Wells Fargo maintained an underweight rating on Tesla stock. Looking ahead to the earnings release, the bank said the company's poor fundamentals “could be overshadowed by the 'dazzling' FSD on the first quarter conference call.”
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But “Once the show is over, the fundamentals will be important again.'' Wells Fargo lowered its full-year delivery forecast to a 12% year-on-year decline from its previous forecast of flat sales.
“TSLA's positive guide is also at risk. We estimate that up to 160,000 cars could be in stock, further increasing px risk.” Low lease rates are also a factor. This raises concerns,” the bank added. “We expect shipping volume growth to slow due to lower demand and lower margins due to price cuts. We remain cautious on margins given the potential for further price cuts and lower volumes. Additionally, Model 2 We are also concerned about demand and profits.”
BofA analysts feel that Tesla will “face increased earnings pressure due to a weak demand environment.” The investment bank feels that unless TSLA develops new geographic markets, it will be difficult for the company to generate additional sales with its current product portfolio or without further price reductions.
Morgan Stanley reiterated its Overweight rating and $310 price target on Tesla in a recent note. The bank said it believes consensus estimates must stop declining for stocks to start outperforming again.
“Our current EPS of $1.12 is well below the non-GAAP FY24 consensus ($2.67). No, this year's forecast is not 'sunk in the kitchen,'” Morgan said. said Stanley analyst Adam Jonas. “We believe the probability of an upward or downward revision to $1.12 is approximately balanced as we are in a period of financial instability.”
Having said the above, the analysts acknowledged that based on their discussion, investors' expectations for Tesla EPS were found to be closer to their number than the sell-side consensus.
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