Electric vehicle (EV) maker Tesla (NASDAQ:TSLA) is scheduled to release its third-quarter results on October 19, after the market closes. Despite the COVID-19-related lockdowns in China during the quarter, Tesla’s China-made deliveries set a record. Also, Tesla’s overall Q3 production numbers exceeded expectations, but deliveries missed the same. Having said that, supply chain and logistic issues, and higher commodity prices could continue to hamper production and margins in the short run.
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The Street expects Tesla to post an adjusted profit of $1.01 per share in Q3, In the prior-year comparative quarter, Tesla had reported adjusted profit of $1.86 per share (on a pre-split basis). Meanwhile, revenue is pegged at $21.96 billion, representing a whopping year-over-year jump of 59.6%, and 29.7% higher than Q2FY22 revenue of $16.93 billion.
Notably, the major overhang on Tesla stock remains CEO Elon Musk’s prolonged purchase of social media site Twitter (NYSE:TWTR).
An Analyst Cuts Price Target Ahead of Results
Ahead of the Q3 print, Wells Fargo analyst Colin Langan cut the price target of TSLA stock to $230 (4.9% upside potential) from $280, while maintaining a Hold rating. The analyst decreased the price target, owing to the higher weighted average cost of capital calculation driven by the high-interest rate environment.
Langan expects Tesla to post a marginal beat owing to a mix of price increases and currency headwinds. Nonetheless, the analyst believes Tesla will be the largest beneficiary of the Inflation Reduction Act (IRA) in the long term. Accordingly, he increased the earnings per share (EPS) projections in his model by an impressive 33% from 2023 through 2026. Moreover, Langan noted that if Tesla makes 900,000 EVs using U.S.-made batteries annually, it would lead to $2.8 billion in savings through tax credits.
Is Tesla Stock a Good Buy Right Now?
Wall Street analysts are currently split on TSLA stock’s trajectory due to a slew of reasons. On TipRanks, Tesla stock has a Moderate Buy consensus rating based on 19 Buys, seven Holds, and four Sells. The average Tesla price target of $325.34 implies 48.3% upside potential to current levels. Meanwhile, the stock has lost 45.1% year-to-date.
Ending Thoughts
Analysts and investors will be eager to hear any update on Tesla’s production and delivery progress in the Q3 conference call. Plus, any confirmation regarding the rumors of a proposed share buyback may be welcomed with enthusiasm. For now, the EV sector remains under pressure owing to the current headwinds. However, Tesla stands to benefit from the IRA and could continue to enjoy the leadership position over the long term.
