Tesla: What 7 Analysts Said About the Q3 Earnings Results

Written by Cláudio Afonso | LinkedIn | X

Tesla released its third-quarter earnings after Wednesday’s market close, posting stronger-than-expected results and projecting a record Q4 2024 along with an outlook for 2025 of more than 2 million vehicles delivered.

Additionally, the company revealed the Cybertruck has achieved positive gross margins for the first time and also plans to reach volume production of its recently unveiled Cybercab model already in 2026 after some Wall Street analysts mentioned concerns on the lack of details mentioned at the We, Robot event held earlier this month.

Analyzing updates from seven different firms, Mizuho, Baird, Wedbush and Piper Sandler reaffirmed their bullish price targets on Tesla shares while Goldman Sachs, Canaccord Genuity and RBC Capital further increased their price target by an average of about 7%.

Tesla shares are trading 10.6% higher at $236.50 during Thursday’s pre-market session after having closed 1.98% lower at $213.65 on Wednesday

Canaccord Genuity analyst George Gianarikas raised the price target on the stock by $24 to $278.00 while maintaining a Buy rating citing “quite good” margins and a “truly solid quarter overall”.

“A product cycle story with accelerating revenue and earnings growth. Margins were good, quite good, much better than expected and a standout for the quarter,” the analyst wrote.

“The quarter was truly solid overall. Most of this strength (as we have written) was thanks to Tesla zigging, as the traditional auto OEMs zagged. A laundry list of OEMs experienced unexpected bumps in business during the quarter, primarily due to poor market conditions in China,” Gianarikas continued.

The analyst sees the company’s results in China as “robust” while naming energy storage gross margins as “exceptional”.

“In contrast, Tesla’s performance in China remained robust, driven by EVs crushing ICE sales. Energy storage performance also remained exceptional — with gross margins breaking above 30% (we see these trends as a solid indicator for trends at Fluence,” Gianarikas concluded.

RBC Capital analyst Tom Narayan raised the price target on the shares by $13 to $249.00 while reaffirming an Outperform rating.

In a new research note, Narayan says Tesla reported “eye-watering Auto GP margin-ex credit in Q3 despite sizable price cutting” adding that analysts “can now focus instead on higher value-added attributes including regulatory credits, energy storage, and most importantly, autonomy”.

“At 17.1%, Tesla’s GP margins ex-credits came in well above consensus of 14.5%. On the call, management cautioned that Q4 would not be as robust and that Q3 benefited from the FSD feature launch as well as better freight/logistics,” the analyst added before commenting on the lower average selling price.

“Still, we think this highlight how healthy the fundamentals are for Tesla at its core car business. Despite pricing down 8.2% y/y, which boosted deliveries +6.4% y/y in Q3, Car profits were resilient,” Narayan wrote.

Goldman Sachs analyst Mark Delaney raised the firm’s price target on the Tesla stock to $250.00 — from $230.00 — while maintaining a Neutral rating. The analyst sees the company as “well positioned for long-term growth”.

“We maintain our Neutral rating on the stock. We believe Tesla remains well positioned for long-term growth, given its leadership position in EVs; the breadth/depth of its technical capabilities in AI, software, and hardware; and its ability to benefit from a full set of solutions including in charging and storage,” Delaney wrote before noting some headwinds.

“However, we see a handful of offsetting factors. These include: 1) We expect the ramp in FSD to take longer than Tesla currently targets; 2) We believe auto fundamentals could remain volatile in the near-term (with lower pricing/incentives a headwind, and we expect delivery volumes to be somewhat lower than Tesla’s outlook for 2024/2025); 3) We see valuation as full,” the analyst wrote.

Goldman Sachs has now a $20 higher price target on the shares due to “higher gross margins and higher regulatory credit revenue”.

“Overall, we are raising our EPS estimates driven primarily by higher gross margins and higher regulatory credit revenue. Our 12-month price target moves to $250 from $230 reflecting our updated estimates,”

Mizuho analyst Vijay Rakesh reiterated a Neutral rating and $230.00 price target on the shares citing “headwinds” with slowing EV demand growth for next year with “Cybertruck lead times dropping with discounts”, and a still “unclear” roadmap for the new model launch.

Piper Sandler analyst Alexander Potter reiterated an Overweight rating and $310.00 price target on the stock noting that the company “disclosed more information than usual, particularly regarding the 2025 outlook”.

Despite not unveiling a specific number, the company led by Elon Musk said it expects a “slight growth” in vehicle deliveries this year. In 2023, Tesla delivered 1.81 million vehicles, up 38% from the year before.

“TSLA shares are indicated higher by ~12% in after-hours trading, and if anything, we’re surprised by the weakness. Tesla disclosed more information than usual, particularly regarding the 2025 outlook, while reiterating plans for a new vehicle in 1H25,” the analyst wrote.

“Elon Musk predicted 20%-30% delivery growth in 2025, thanks partially to this new product. Even if his outlook proves optimistic, there’s room for upside vs. our current expectation of +8%”,” he added.

“We still have unanswered questions re: how Tesla achieved such a sizable q/q up-tick in gross margin (we suspect production tax credits had a role to play) — and we would still like Tesla to share more detail re: the financial contribution from self-driving software. But we are nit-picking. It’s hard to be anything but optimistic following today’s call.”

Baird analyst Ben Kallo reiterated an Outperform rating and $280.00 price target on the stock saying the results beat the firm’s estimates “across the board”.

“Reiterate Outperform rating. Q3 results beat our estimates across the board, and we expect that the updates on both the lower cost vehicle and auto gross margins rebounding will be a turning point for sentiment,” Kallo wrote.

“We estimate that deliveries in 2025 will be choppy due to downtime associated with shifting production from existing vehicles to the lower cost “Model 2″ and are adjusting our estimates accordingly. Consistent with Musk’s comments on the call, we model slight y/y growth in 2024 and ~20% in 2025,” he added.

Tesla delivered 462,890 vehicles in the third quarter taking its year to date deliveries to about 1.29 million units.

Written by Cláudio Afonso | LinkedIn | X