Credit Suisse upgrades Tesla to Outperform and maintains $1025 Price Target

Credit Suisse upgrades Tesla Rating from Neutral to Outperform and maintains a $1,025 Price Target.

On the report released last week after Tesla’s Earnings, Credit Suisse said: “To the extent Model 2 timing is in fact accelerated, with a release prior to 2024, it could accelerate Tesla’s lead in the EV market, as thus far competitors have only released alternatives mostly to the higher priced Model 3/Y (and even in this regard competition has been limited thus far). Simply, Model 2, with a $25k base price, could be viewed as the best attempt to truly democratize EV’s.”

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Credit Suisse enhanced the following keypoints:
“EPS beat: Adj. EPS $2.54 vs. consensus $2.46, CS $2.81. Beat vs. consensus
driven by revenue, higher auto gross margins, and services/other margin, more than
offsetting miss on Energy margin and higher opex. Lumpy items provided a ~15c
benefit to EPS (interest/other + tax, net of miss on reg credits).


Auto gross margin beat, mixed result in non-auto. Auto GM ex credits 29.2%,
ahead of consensus 28.5% but slightly below CS 30.0%, and an all-time record; up
sequentially vs. 3Q (28.8%). Tesla flagged volume growth and cost reduction as
drivers, more than offsetting cost inflation and higher warranty cost; we assume
increased Shanghai production mix and model mix drove upside.”

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“Outside of the auto gross margin beat, Tesla also posted profit upside vs. consensus
on Service/Other (benefit from strong used car market), which was more than offset
by a substantial miss in Energy.”

Last week, Tesla announced that the company aims to “increase our production as quickly as we can, not only through ramping production at new factories in Austin and Berlin, but also by maximizing output from our established factories in Fremont and Shanghai.”

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• Earnings: $2.54 per share, adjusted, vs. $2.33 per share as expected by analysts.

• Revenue: $17.71 billion, vs. $17.1 billion as expected by analysts.

• Automotive Gross Margin: 30.6%

Source: Tesla
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Revenue rose 65% year over year in the quarter, while net income, at $2.32 billion, was up some 760%, according to Tesla’s statement.

The company says they have successfully increased the number of FSD Beta vehicles from a couple of thousand in Q3 to nearly 60,000 vehicles in the US today.

“Our own factories have been running below capacity for several quarters as supply chain became the main limiting factor, which is likely to continue through 2022,” the company said.

Source: Tesla

Earlier this month, Tesla announced that deliveried 308,600 vehicles in Q4, setting a new record during the last Quarter. In 2021, Tesla delivered a total of 936,172 vehicles in 2021, crushing all the expectations. 

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During Q4 2020, the company delivered about 181,000 vehicles and Wall Street was looking for about 176,000 vehicles to be delivered at the time of the release. The result was about a 3% beat versus expectations. This quarter, Wall Street expectations were on 275,000 units, which means Tesla beat by more than 12%.

Moody’s expect that Tesla will deliver nearly 1.4 million vehicles in 2022, up from about 936,000 in 2021.

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