Piper Sandler analyst Alex Potter has increased his Tesla’s price target to $1,350 (from $1,300) while maintaining a Buy rating following a review of Tesla’s 10-K annual filing.
“We are refreshing our model to reflect insights gleaned from the 10-K, as well as an updated forecast for deliveries, capex, and margins. After making these changes, our DCF-based price target is increasing to $1,350, up from $1,300 previously. We are focusing on five key topics: 1) deliveries; 2) gross margin; 3) opex; 4) software; 5) cash flow. See below for a summary of each topic. We delve more deeply on pages 2-8. TSLA remains our #1 pick.”
When it comes to Tesla’s deliveries, the analyst says:
1) We forecast 1.58M deliveries in 2022; this implies 69% growth vs. 2021
2) For reference, Tesla aims for at least 50% y/y unit growth for the foreseeable future
3) Model Y is the biggest near-term growth driver, while chip supply is the limiting factor
4) Our model contains a delivery forecast for each product by region (see pages 2-3)
5) We still expect deliveries to peak at 11.8M/year in 2030
Gross Margin
1) Gross margin was a success story in 2021, but we struggle to predict in 2022
2) We think automotive gross margin (excl. credits) will fall to 25.8% in 2022 (-120bps y/y)
3) The y/y decline is to reflect the dilutive impact of new factories
4) Lower regulatory credits should drive Tesla-wide gross margin to 24.3% (-100bps y/y)
5) We expect higher margins in Energy & Service, but this is a low conviction forecast
Last week, around 7,000 Model Y and Model 3 were seen ready to export. The vehicles went to the Luchao Port in Shangai and were produced in Tesla’s Giga Shangai. Recently, Elon Musk has mentioned that Giga Shangai tends to focus on exports in the first half of the quarter before focusing its output on the domestic Chinese market in the second half.
Tesla registered 167,969 vehicles in Europe during 2021, an increase of 70.9% from 2020 and 51% up from 2019. During the year, Tesla sold 26,175 Tesla Model Y, 134 Tesla Model S and 230 Tesla Model X in the European Market.
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.
Recently,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.