Goldman Sachs has reduced its price target on Tesla (TSLA) to $235 from $305, but maintains his Buy rating on the stock as he still sees a positive long-term outlook.
It comes as Tesla stock has fallen to levels not seen since November 2020, with shares down 55% this year.
“We believe Tesla remains well positioned for long-term growth as a leader in electric vehicle cost structure and total solutions (e.g., vehicle supply, charging, storage, software and services). well-integrated manner), and we maintain our buy rating on the stock,” Goldman analyst Mark Delaney wrote in a note today.
However, Delaney said the company is now moving to a price target based on P/E and has introduced a new model for its 2025 EPS estimate.
From a deliveries perspective, Goldman sees Tesla reaching 420,000 deliveries for the fourth quarter (from 440,000 previously) and 1.85 million units in 2023 (from 1.9 million).
Delaney notes that while the company could have production capacity of around 2.4 million units in 2023, “macro indicators” in several regions where Tesla operates are moderating, and Tesla’s recent metrics such as declines pricing and insurance incentives suggest global demand is now weaker for Tesla. .
However, Tesla has a number of positive cost drivers coming in the coming years, Delaney said, citing ramp-ups in Austin and Berlin that could boost profitability, new battery cells, IRA credits and a potential new vehicle platform that could cut costs by around 50%.
“We believe the pass-through of cost-cutting to consumers, along with factors such as expanding leasing programs and consumer tax credits, could help Tesla drive growth and margins. However, the extent to which these levers will contribute to volume and the cost to Tesla of achieving them will be critical to watch,” Delaney writes.
Of note are Delaney’s comments about CEO Elon Musk, noting that his increased Twitter presence and foray into political topics has made the Tesla brand “more polarizing.” Delaney said it was crucial for Tesla to redirect the company’s consumer focus to its “core attributes of sustainability and technology” in order to exceed its long-term expectations for Tesla.
Assuming Tesla can shift consumer focus and implement its vision of electric vehicle growth in multiple regions and control costs with new technologies and platforms, the stock could see a move higher.
“To the extent that Tesla can demonstrate that its demand levers and the IRA can help drive strong growth and margins over the coming quarters, we believe the stock could trade at around $300 using 40- 50X (which would be supported by a bit higher growth rate using PEG analysis, and based on our discussions with investors) an EPS estimate of $6-7,” Delaney said.
—
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on instagram.
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app to Apple Where android
Follow Yahoo Finance on Twitter, Facebook, instagram, Flipboard, LinkedInand Youtube
Comments are closed.