Tesla Q4 Earnings Rally Proves ‘All Bulls Needed To Hear,’ Analyst Says

Electric vehicle giant Tesla Inc (NASDAQ:TSLA) beat analyst estimates for each revenue and earnings per share within the fourth quarter. Here’s what the Street has to say Thursday concerning the quarterly print. 

The Tesla Analysts: Bernstein analyst Toni Sacconaghi has an Underperform rating and $150 price goal. 

Oppenheimer analyst Colin Rush has a Perform rating and no price goal.

Guggenheim analyst Ronald Jewsikow has a Sell rating and $89 price goal.

Piper Sandler analyst Alexander Potter has an Chubby rating and $300 price goal. 

Related Link: Trading Strategies For Tesla Stock Before And After Q4 Earnings 

The Tesla Takeaways: While the fourth-quarter earnings report beat estimates, Sacconaghi said there was something for each bulls and bears within the report and commentary.

“Musk’s proclamation that orders YTD were 2x production amid price cuts and that Tesla was targeting 1000+ GW in cell production over time (similar to 14 million cars) was all bulls needed to listen to,” Sacconaghi.

While the report offered many signs of growth for the longer term, Sacconaghi highlighted the margins as being a priority.

“Auto gross margins were much worse than anticipated. Most notably, these margins were before the actual price cuts kicked in earlier this month.”

The analyst sees the potential of margins breaching 20% for some quarters in 2023.

“It’s unclear if consensus numbers will get reset sufficiently and whether Tesla could still struggle with demand issues over the course of the 12 months. Recent demand challenges also raise questions on whether long run forecasts for Tesla’s market share and margins could also be too high.”

Rusch also found items for each bulls and bears to love within the earnings report and conference call.

“We expect bulls to point to numbers bottoming out, price drops driving demand increases, TSLA’s structural cost benefits, potential for operating leverage, and improving FSD performance,” Rusch said.

The analyst said bears can point to recession concerns that might impact recent automotive purchases and increased competition for the electrical vehicle market. The analyst also sees uncertainty over Twitter’s funds as a part of the bear case.

“While we anticipate shares will trade higher into the corporate’s March 1 analyst day as bearish scenarios don’t seem like playing out, we proceed to expect a choppy begin to the 12 months and remain on the sidelines.”

Jewsikow said the fourth-quarter earnings results from Tesla were “soft,” with gross margins coming in below analyst estimates and a lower tax rate helping the earnings beat.

“Order commentary was encouraging, albeit not a surprise, but wait times remain at trough levels and short-term demand creation from sizable price reductions have to be sustained right into a ramping supply backdrop,” Jewsikow said.

The analyst said he was surprised to see Tesla shares rallying after-hours Wednesday with revisions likely coming to gross margins by analysts.

“We consider Bulls will interpret order commentary as TSLA largely derisking the 1.8 million delivery guidance at current prices globally, but we feel that is misguided as supply continues to ramp and the demand pull-forward from price reductions wanes.”

The analyst also sees risks for Tesla in China and Europe.

Potter called 2022 a troublesome 12 months for Tesla but said this might have been from misplaced concerns from investors over backlogs and price cuts.

“We proceed to consider that Tesla’s shrinking backlog was due primarily to the corporate’s rapidly-rising production rate, in addition to maxed-out market share in low-volume, high-price segments,” Potter said.

The analyst said Tesla could have the flexibility to make and sell 2 million units in 2023, ahead of the corporate’s guidance of 1.8 million units.

Potter also points to the analyst day on March 1 as a catalyst for the corporate, with recent growth levers being teased.

“We still strongly recommend owning the stock.”

TSLA Price Motion: Tesla shares were trading 8.95% higher at $157.35 Thursday morning.

Read Next: Here’s How Many Vehicles Tesla Has Delivered And Produced In Each Quarter Since 2019 

Photo via Shutterstock.

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