Tesla Stock: Next Stop, $220?

Despite this week’s dip, Tesla (NASDAQ:TSLA) shares are off to a superb start in 2023, having posted year-to-date gains of 39%. For investors who’re wondering if there’s still more fuel left within the tank, one analyst has some excellent news for you.

Deutsche Bank’s Emmanuel Rosner gives Tesla shares a $220 price goal to go together with his Buy rating. Assuming the analyst is correct about that, investors in Tesla stand to rake in ~27.5% profit over the following 12 months. (To observe Rosner’s track record, click here)

This 12 months’s surge is available in the wake of a miserable 2022, during which TSLA shares shed 65%, but a recent overall shift in investor sentiment and Tesla’s better-than-expected Q4 earnings have helped fuel the rally.

Investors liked the recent Q4 report but not all of it was rosy. The quarter was marked by strong revenue but in addition showed softer vehicle gross margins, mainly on account of costs related to the ramp-up of the EV leader’s 4680 cells and latest facilities, while lower ASPs on the back of price cuts also played their part.

The corporate’s outlook also called for production of roughly 1.8 million units for the 12 months, amounting to only 37% year-over-year growth, although from 2020 levels, that figure stays higher than its multi-year goal of fifty%+ CAGR. Nevertheless, that’s below consensus expectations.

In response to Rosner, “this represents noticeable downside to street estimates, but management highlighted that this goal is conservative, accounting for any unexpected disruption over the course of 2023. Current order rates are running at about 2x its production rate post the cut, which can likely moderate over the approaching quarters but represents a positive signal for the quantity outlook within the near term.”

Rosner now models 1.84 million units, amounting to a 40% year-over-year increase, and leading to a revenue forecast of $94 billion (from $92 billion on “higher” ASP).

Looking ahead, with Q1 set to be the “trough” for the 12 months and margins expected to “incrementally improve” because the 12 months progresses, Rosner believes investor expectations “should largely reset following the quarter.”

Investor focus will now turn to the upcoming investor day. The March 1st event will happen in Austin, Texas, and Rosner will probably be keen to seek out out more regarding the corporate’s next-generation vehicle platform, which the analyst reckons should support “several different top hats across multiple vehicle segments,” robotaxi included.

Tesla is targeting a COGS of around $20,000 per unit for the platform – half the current price – and for the manufacturing output to double based on the identical footprint, with spend reaching just half the present capex.

Overall, Wall Street is mostly positive about Tesla’s forward path. Taking a look at the consensus breakdown, based on 21 Buys vs. 7 Holds and three Sells, the stock claims a Moderate Buy consensus rating. Going by the $192.75 average goal, the shares will see gains of ~12% over the approaching 12 months. (See Tesla stock forecast)

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Disclaimer: The opinions expressed in this text are solely those of the featured analyst. The content is meant for use for informational purposes only. It is extremely necessary to do your individual evaluation before making any investment.

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