Piper Sandler analyst reiterates Tesla’s $1,350 price target after Q1 deliveries

Written by Cláudio Afonso | info@claudio-afonso.com

Piper Sandler analyst Alex Potter reiterated Tesla’s price target of $1,350 with an Overweight rating following Q1 deliveries announced on April 2. “The Q1 result exceeded our estimate of -294k units, because we assumed a more severe impact from COVID, coupled with Chinese New Year and two fewer days in Q1 vs. Q4. In our opinion, these reports are only useful when they convey something predictive about the future, and in this regard, the delivery miss isn’t especially instructive. Delivery wait times are still 2-10+ months, depending on model and region, Tesla’s market share is still rising. Also of note: production was flat q/q (a good result, all things considered).”

The analyst also enhanced Tesla’s Market Share in the US with the following notes:
1) In the trailing 3-months, we estimate Tesla sold about 2.7% of all new cars in the U.S;
2) As a percentage of the luxury market, Tesla’s share is much higher: about 16.5%;
3) Model 3 now represents about 1 in every 4 luxury sedans sold in the United States;
4) ..this is -4x higher than the next best-selling luxury sedan (the BMW 3-Series);
5) Model Y is also the best-selling luxury SUV in the U.S., with ~12% segment share;
6) All competing EV models (e.g. Audi e-tron, Ford Mach-E, etc.) lag Tesla considerably.

On April 2, Tesla reported Q1 2022 production and deliveries numbers beating Wall Street estimates of 309,000 units delivered. The company produced 14,218 Model S/X vehicles and 291,189 Model 3/Y vehicles in Q1, totaling production of 305,407 vehicles. In terms of deliveries, Tesla reported 14,724 Model S/X units and 295,324 Model 3/Y, totaling of 310,048 delivered vehicles in the first quarter of the year. Tesla has now delivered 2,644,770 vehicles since 2012.

Tesla stated: “In the first quarter, we produced over 305,000 vehicles and delivered over 310,000 vehicles, despite ongoing supply chain challenges and factory shutdowns.” Tesla noted that it will post its financial results for the first quarter of 2022 after market close on Wednesday, April 20. As firstly announced by EV, Tesla’s GigaShanghai will pause production from March 28 to April 5 due to city-wide lockdown.

Elon Musk confirmed on March 29 that Tesla’s Full Self Driving Beta should be available in Europe for “Left Handed Drive” (LHD) this summer, and for right handed drive (RHD) “a few months later”. “These dates depend on regulatory approval” — Musk added. On March 27, Tesla’s CEO revealed that he usually uses the Alpha Build switching to beta “right before release” so he knows “what Tesla owners are getting”.

On Monday, March 28, Tesla announced that will ask its shareholders to vote in order to enable a stock split. The vote will take place at Tesla’s 2022 Shareholder meeting later this year. The last meeting was held in October 2021 at Tesla’s GigaFactory in Austin, Texas.

Jefferies analyst Philippe Houchois has recently raised Tesla’s Full Year 2022 and 2023 Earnings estimates by 7-9% due to recent price hikes and higher free cash flow. However, the Analyst lowered Tesla’s price target from $1,400 to $1,250 to reflect higher inflation and due to “a 50bps increase in assumed cost of capital”.

Written by Cláudio Afonso | info@claudio-afonso.com