Credit Suisse analyst Dan Levy raised the price target to $1,125.00 per share from the prior $1,025.00 on Tesla (NASDAQ:TSLA).
Levy expects Tesla to easily beat the Q1 EPS consensus of $2.26 with his predictions sitting at $2.56. He adds that investors will remain focused on margins amid cost inflation.
Three key themes in the Q1 EPS are:
1) Berlin + Austin help volume growth, but manage expectations on ramp;
2) Shanghai shutdown to dampen 2Q ests. at core of reduced delivery outlook;
3) Significant focus on gross margin in the 1Q print.
Levy says that deliveries from Berlin and Austin factories are a “key positive,” although the recent shutdown in Shanghai dampens the 2022 outlook.
“We estimate 90k units lost in 2Q alone. And combined with a more conservative outlook on the ramp in Berlin and Austin, we reduce our ’22 delivery forecast to 1.42mn units (a ~100k unit cut). The Shanghai restart cadence + the Berlin/Austin ramp add an element of uncertainty to ’22 deliveries,” Levy said in a client note.
Moreover, any negative commentary on margins will very likely weigh on Tesla stock.
“We expect significant focus on gross margin in the 1Q print – we forecast gross margin ex. credits of 26.6%, -260bp q/q, and a reversal from Tesla’s recent run of lofty margins, driven by cost inflation and production inefficiencies, more than offsetting favorable mix and price. While we think price increases will help to blunt the impact of cost inflation in 2022, we nevertheless expect a net negative, especially given the timing lag of price increases,” the analyst added.
Tesla stock price closed at $1,004.29 yesterday.
By Senad Karaahmetovic