Tesla Faces Margin and Earnings Pressure as Deutsche Bank Analyst Lowers Price Target

Deutsche Bank's Emmanuel Rosner lowered their price target on Tesla (NASDAQ: TSLA) by 8.3% from $218 to $200 on 2024/03/28. The analyst maintained their Strong Buy rating on the stock.

According to Rosner, the reduction in price target was driven by weaker-than-expected China sales in the last few weeks of March and Tesla's recent plan to cut production in Asia. The analyst now projects 414,000 deliveries for the first quarter, down from the previous estimate of 427,000.

Furthermore, Rosner also revised down their delivery estimate for the fiscal year 2024 to 1.9 million units, below the current consensus of 2.06 million. This represents only mid-single-digit growth for the year, which indicates a more conservative outlook compared to market expectations.

The analyst highlighted that investors should anticipate continued pressure on Tesla's margins and earnings due to the company's deep price cuts in China and Europe earlier in Q1. Additionally, moderate price adjustments were made in February to incentivize vehicle purchases.

Rosner noted that Tesla's announcement of price increases in the US and China, effective from April 2024, was an attempt to boost sales in March rather than a reflection of solid demand. This suggests that the company may face challenges in sustaining its profitability in the near term.

On the same day, Wedbush analyst Daniel Ives also provided an update on TSLA. Ives lowered their price target by 4.8% from $315 to $300 but maintained a Buy rating on the stock.

Currently, 66.7% of top-rated analysts view TSLA as a Strong Buy or Buy, while 33.3% consider it a Hold. No analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that Tesla's upcoming year will deliver earnings per share (EPS) of $5.43. This represents a 14.8% increase on a year-over-year basis if the analysts' predictions prove accurate.

In terms of performance, since Tesla's last quarterly report on December 31, 2023, the stock price has declined by 29.3%. Year-over-year, the stock is down 7.1%. Notably, during this period, Tesla has underperformed the broader market, with the S&P 500 experiencing a decline of 32.3%.

Emmanuel Rosner, the Deutsche Bank analyst, is ranked in the top 19% of Wall Street analysts by WallStreetZen. With an average return of 9.4% and a 39.7% win rate, Rosner specializes in the Industrials and Consumer Cyclical sectors.

Tesla, Inc. is a renowned company that designs, develops, manufactures, leases, and sells electric vehicles and energy generation and storage systems worldwide. Its operations are divided into two segments: Automotive and Energy Generation and Storage. The Automotive segment offers electric vehicles, automotive regulatory credits, non-warranty after-sales services, used vehicles, retail merchandise, and vehicle insurance. On the other hand, the Energy Generation and Storage segment focuses on solar energy generation and energy storage products, along with related services for residential, commercial, and industrial customers.

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