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: Tesla analysts trim their estimates after deliveries fall

Wall Street was busy Tuesday rewriting some of its estimates for Tesla Inc. after the electric-car maker reported fewer quarterly deliveries, its proxy for sales, over the long weekend.


said Saturday it sold nearly 255,000 vehicles in the second quarter, a decline of about 18% from the first quarter and also below fourth-quarter numbers.

Analysts polled by FactSet most recently estimated deliveries of around 264,000 vehicles for the quarter.

Tesla shares edged higher on Tuesday, bucking a downdraft for the broader equity market. The stock is down about 35% for the year so far, compared with losses of around 21% for the S&P 500 index.

Wall Street had braced for a difficult quarter in sales and production for the EV maker, as Tesla’s Shanghai factory was impacted by factory shutdowns across China under “COVID zero” policies.

Tesla is set to report second-quarter earnings after the bell on July 20. FactSet consensus calls for adjusted EPS of $1.91 on sales of $17 billion. That would compare with second-quarter 2021 EPS of $1.45 on sales of $12 billion.

Ryan Brinkman at JPMorgan lowered second-quarter and full-year earnings per-share estimates as well as his price target on Tesla stock, focusing on deliveries that were “materially less” than the previous quarter and estimates earlier in the year.

“Lower production in Shanghai due to factors outside Tesla’s control is likely the largest contributor to the production shortfall pressuring deliveries during the quarter, although there may be reason to believe that production — and financial results — could be being impacted also by company-specific execution issues at the company’s new factories in Austin and Berlin,” Brinkman said.

Brinkman kept the equivalent of sell on Tesla stock, and trimmed his price target on the stock to $385, from $395. The analyst lowered full-year EPS to $10.80 from $11.50, and his second-quarter EPS expectations to $1.70 from $2.26.

Garrett Nelson at CFRA lowered his 12-month target by $100 to $1,100, and also lowered 2022 adjusted EPS estimate by 25 cents to $10.60.

“We caution that the Austin and Berlin plants are likely to remain a drag on bottom line results until they attain higher utilization rates, but we see total volumes rebounding strongly in the second half of the year,” Nelson said in his note.

In its press release accompanying the deliveries and production numbers, Tesla highlighted that June was the highest vehicle production month in its history.

The “record production in June is a sign that Shanghai is ramping
back up well and that the company made progress recently at its Berlin and Austin factories,” Goldman analyst Mark Delaney said.

Delaney also trimmed trimmed his expectations for Tesla’s second-quarter EPS to 68 cents, from $1.24, to “reflect lower deliveries and auto gross margins,” which he sees around 25.5%, from 26.5%, to account for lower units, regional mix, and the impact of “challenges” in the Berlin and Austin plants. The analyst kept his price target on Tesla shares at $1,000, with a buy rating.

Goldman’s full-year EPS estimate, however, went to $10 from $10.20.

Dan Ives at Wedbush kept his $1,000 price target on Tesla stock and a stock rating equivalent to buy. The “elephant in the room” for Tesla, however, is the risk of a recession and a potential impact on demand.

“While the softer macro will clearly impact demand around the edges the coming quarters, we believe Tesla has ample demand capacity to hit ~2 million units in 2023 globally with production capacity that can exceed this number when factoring in Austin and Berlin to a normalized China production target,” Ives said.

June delivery numbers “were ugly and nothing to write home about,” but Wall Street will focus on the second half of the year and on the “overall demand picture staying firm.”

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