Written by Cláudio Afonso | info@claudio-afonso.com
Credit Suisse analyst Dan Levy raised on April 19 the firm’s price target on Tesla shares to $1,125 per share from $1,025. The analyst estimates a 90,000 units loss for Q2 due to GigaShanghai shutdown since March 28. Although, Levy expects the company to present a Q1 EPS of $2.56, beating the consensus of $2.26.
The estimate is due to three main factors: Berlin + Austin help volume growth, but manage expectations on ramp; Shanghai shutdown to dampen Q2 estimates, at core of reduced delivery outlook; and significant focus on gross margin in the Q1 print.
Credit Suisse reduced its 2022 delivery guidance by around 100,000 units, expecting now Tesla to deliver a total of 1.42 million vehicles. Levy wrote:
1. Berlin + Austin help volume growth, but manage expectations on ramp: Deliveries have commenced from Tesla’s Berlin and Austin plants – a key positive, as it underscores Tesla’s volume growth opportunity ahead. However, we believe expectations must be managed appropriately on the shape of the ramp.
2. Shanghai shutdown to dampen 2Q est’s, at core of reduced delivery outlook: The recent shutdown in Shanghai dampens the ’22 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.
3. Price / cost a key question for 2022: 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.”
Earlier this week, Piper Sandler analyst Alexander Potter lowered the firm’s price target on Tesla shares to $1,260 from $1,350 while keeping an Overweight rating. The analyst expects that China lockdowns “may continue impacting production in the second half of 2022” resulting in a cut of the guidance numbers to 1.54M from 1.58 million vehicles.
Last week, Elon Musk was interviewed by Chris Anderson during TED Talks in Vancouver, Canada. On the day that Musk confirmed its intention to buy Twitter and turn it private (keeping the largest number of shareholders it is possible by law), Tesla’s CEO talked about Tesla, SEC, and Twitter.
Written by Cláudio Afonso | info@claudio-afonso.com