Here's What Wall St. Experts Are Saying About Tesla Ahead Of Earnings

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Tesla (TSLA) is expected to report results on its fiscal third quarter on Wednesday, October 23, with a conference call scheduled for 5:30 pm EDT. What to watch for:


POSITIVE CATALYST: Barclays forecasts a Q3 beat for Tesla, with earnings per share of 68c versus the consensus estimate of 60c. It expects Tesla to post upside driven by margin improvement, cost reductions, and potentially also from solid regulatory credit revenue. However, Barclays still believes the company's outlook is "somewhat more uncertain." With Tesla's robotaxi day passed, the focus, at least for now, shifts back to fundamentals, the firm tells investors in a research note. Barclays believes there are outstanding questions on the volume outlook and path to margin recovery, and also questions the path to unlocking value from Tesla's emphasis on autonomous vehicle-driven growth. But given expectations of a Q3 beat and reminder of stabilized near-term estimates, it thinks the Q3 results "could be a positive near-term catalyst." The firm keeps an Equal Weight rating on Tesla with a $220 price target.


PERFORMANCE TO HINGE ON GROSS MARGIN: In a research note ahead of quarterly results, Piper Sandler notes Tesla's stock has fallen about 15% since peaking prior to its Robotaxi event, and the likelihood of additional downside will depend largely on gross margin. The firm expects gross margin to rise vs. last quarter, but if it is wrong, the next several months could be choppy at best. Regardless of the Q3 result, Piper thinks a sustainably bullish re-rating may not occur until investors have reasons to boost estimates. For the firm's part, Piper does expect these reasons to emerge in the next year — but perhaps not during the Q3 call itself. A new product unveiling would be a good start, it says. An even more meaningful catalyst would involve Tesla disclosing take-rates for full self-driving, or FSD, software, ideally coupled with evidence of an upward inflection. Regulatory approval for FSD in a new region would also help, Piper adds. The firm has an Overweight rating on Tesla with a price target of $310 on the shares.


ROBOTAXI EVENT: Shares of Tesla were under pressure following the company's unveil of its highly anticipated "Cybercab." Commenting on Tesla's "We, Robot" event, Wells Fargo said it was mostly "razzle-dazzle" with "little substance." CEO Elon Musk expects unsupervised testing to begin in 2025 and targeted operating costs of 30c-40c per mile, but the company provided few details, the firm told investors in a research note. Wells added that Tesla did not outline the regulatory timeline reiterated its vision-only technology. "The event succeeded in fostering excitement but offered little substance," the firm writes. Wells expects company fundamentals will come back in focus. The firm reiterated an Underweight rating on the shares with a $120 price target.

Voicing a similar sentiment, Goldman Sachs said the company demonstrated "very strong progress" with the Optimus humanoid robot, and the Cybercab looked attractive, but the lack of data shared on full self-driving performance, relatively limited details on the robotaxi business plan, and absence of a lower-cost consumer vehicle unveil "may be disappointing for some market participants and lead the stock to pull back after the recent run." The firm keeps a Neutral rating on Tesla with a $230 price target after attending the company's robotaxi event.

Meanwhile, Piper Sandler said that while Tesla's robotaxi event "was amazing," it is probably not enough to sustain the stock's recent momentum. The "most trading-oriented firms will be underwhelmed by the robotaxi unveiling," the firm tells investors in a research note. Piper would not be surprised if the stock sells off in the coming weeks, "as pre-event momentum fizzles." While "true believers," which include Piper, "have every reason to feel energized after the unveiling," it is difficult to make upward revisions to 2025 and 2026 estimates following the event, the firm contends. Piper believes many investors had expected this event to "deliver something more concrete." It keeps an Overweight rating on the shares with a $310 price target.


BACK TO OPERATIONS: On Monday, Jefferies raised the firm's price target on Tesla to $195 from $165 but kept a Hold rating on the shares. The company's "We, Robot" event "mostly fell flat" and without much indication of progress on either technology or business models, the firm is "back to focusing on operations and lingering concerns about governance and funding." For Q3, Jefferies forecasts revenue, auto gross margin and free cash flow of $19.9B, 14.5% and $1.6B, respectively.


Q3 DELIVERIES: Earlier this month, Tesla reported Q3 deliveries of 462,890 and production of 469,796 vehicles. The EV maker stated that, "In the third quarter, we produced approximately 470,000 vehicles, delivered approximately 463,000 vehicles and deployed 6.9 GWh of energy storage products."


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