Daiwa cuts Tesla target to $177 on ‘Twitter distraction’

Daiwa analyst Jairam Nathan lowered the firm’s price target on Tesla to $177 from $240 and keeps an Outperform rating on the shares. The analyst is now reflecting the "Twitter distraction" and weak macro environment into this estimates and stock valuations. He cut his 2022 and 2023 earnings per share estimates to $4.10 and $5.30 from $4.15 and $5.75, respectively, to reflect lower delivery and pricing estimates. Nathan reduced his 2023 delivery estimate only by 5% but assumes an 8% year-over-year reduction in revenue per unit. He also introduced a 2024E earnings per share estimate of $6.90, assuming a 21% increase in deliveries, reflecting full year impact of Cybertruck sales and further ramp-up of Tesla’s Berlin and Austin plants. The target cut reflects a "higher risk profile from the Twitter distraction." Nathan continues to view Tesla shares favorably on a fundamental basis, citing the company’s increasing competitive advantage from the Inflation Reduction Act and potential innovations such as 4680 battery with dry electrode process.