2Q23 has come to an end, but before we get a full picture of how it turned out for Tesla (NASDAQ:TSLA), the EV leader will announce its delivery numbers this weekend.
Ahead of the readout, and based on the expectation that prior price cuts and a strong performance in China will result in sequential volume growth, Deutsche Bank analyst Emmanuel Rosner has made some alterations to his estimates.
The analyst now sees 2Q23 deliveries hitting 448,000 units, up from the prior forecast of ~438,000 and amounting to a 76% year-over-year increase and a 6% sequential growth.
The anticipation of higher deliveries has led to adjustments in other Q2 expectations. The revenue forecast has been raised from $23.5 billion to $24 billion. Additionally, reflecting the price cuts that occurred earlier in the quarter, as well as subsequent smaller price increases (particularly on Model Y), the gross margin (excluding credits) expectations have improved from a quarter-over-quarter decline of -200 basis points to -140 basis points. As a result, the Q2 gross margin is projected to be 17.6%. The upshot of all this, is EPS of $0.79 compared to $0.73 beforehand, which is the same as the Street’s forecast. For revenue, consensus expectations land at $24.3 billion, slightly above Rosner’s revised outlook.
While Q2 margins will be under the microscope as Tesla tries to balance between boosting demand and cutting prices, it’s a conversation that will continue beyond the upcoming print. “We believe the debate going forward becomes not the specific margin outlook for Q2, but rather the dynamic between potential additional pricing cuts and pace of cost unwind beyond Q2,” Rosner explained on the matter. “In the very near term, we think worries over volume, price, and margin dynamics are still front and center, and estimate revisions to 2023 and 2024 could continue to take place in the near term, if Tesla needs to lower prices further to match demand with its growing supply.”
This could put some “pressure on the stock,” says Rosner, but in the meantime, the analyst has boosted his price target from $230 to $260. (To watch Rosner’s track record, click here)
What does the rest of the Street think? Looking at the consensus breakdown, opinions from other analysts are more spread out. 14 Buys, 12 Holds and 5 Sells add up to a Moderate Buy consensus. However, the $218.58 average price target indicates 16.5% downside from current levels. It will be interesting to see whether the analysts downgrade their ratings or upgrade price targets over the coming months. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
