Tesla analysts up and down Wall Street are painting an ugly picture as the focus turns to all-important delivery numbers

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  • Tesla shareholders and analysts are gearing up for the electric automaker’s second-quarter delivery figures, which are expected in the coming days.
  • The results, which follow last quarter’s poor numbers, arrive at a unique moment for the automaker; shares have bounced in recent weeks after a devastating months-long sell-off.
  • Analysts at prominent Wall Street firms have warned investors in recent days that while delivery figures will likely meet or exceed expectations, the earnings outlook still looks grim.
  • “We raise our delivery estimate to ~85k vehicles from ~75k, but still forecast ongoing losses,” Barclays analyst Brian Johnson wrote in a recent report.
  • Track Tesla shares here in real time.

Tesla may release second-quarter delivery figures in the coming week that sate Wall Street’s expectations. But the automaker’s future profitability and questionable underlying demand remain fundamental wildcards.

That’s what a cadre of equity analysts at investment giants from Goldman Sachs to Barclays have conveyed to investors in recent days as Tesla is expected to release quarterly delivery figures in early July.

“While we believe 2Q19 should be fine – and the company likely achieves volumes near FactSet consensus – we do believe 2H19 (and beyond) volume estimates look high considering there are fewer levers to pull to stoke demand going forward,” the Goldman analyst David Tamberrino, who rates Tesla a “sell,” wrote in a note June 20 note.


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As many of his equity analyst peers have done this year amid the stock’s months-long decline, Tamberrino cut his target on the stock for the fourth time this year to $US158 from $US200. He expects the second quarter was a “better environment” for deliveries, but to an unsustainable degree.

Tamberrino added: “We believe that is the largest question for investors to underwrite at this point – what are sustainable demand levels for the Model S, Model X, and Model 3 – and how does that change with the introduction of Model Y production.”

Tesla's US Model S and Model 3 deliveries.Goldman SachsTesla’s US Model S and Model 3 deliveries.


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Tamberrino is far from alone. His reduced target underscores the volatility in expectations for Elon Musk’s automaker, mirrored in its stock price, in recent months.

After Tesla reported a 31% quarter-over-quarter drop in vehicle deliveries in April, stoking demand concerns, analysts say the company appears better-positioned for deliveries this time around. The stock is up 27% since plunging to a 2 1/2-year low in early June. But that improved near-term outlook may not be still not enough to mark a sea change.

“Expect improved Q2 deliveries to drive shares near term,” the sell-rated UBS analyst Colin Langan told investors on Friday, “but Q2 profits and second half deliveries keep us cautious.”

That view prompted Langan to cut his price target for the third time this year, to $US160 from $US200, and reduce his earnings estimates for this year through 2023. He now expects a 2019 loss of $US8.00 per share, up from a loss of $US6.15.


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Another
Tesla analyst just slashed his price target for the 3rd time this year ahead of critical delivery numbers

Others have conveyed a similar view. Barclays analyst Brian Johnson, long a Tesla bear, upped his delivery estimates in a Thursday note to clients. But he still sees a quarterly loss in the cards.

“We raise our delivery estimate to ~85k vehicles from ~75k, but still forecast ongoing losses,” Johnson said.

Credit Suisse, for its part, initiated Tesla coverage on Wednesday with an “underperform” rating and bearish $US189 price target. The analyst believes investors haven’t fully appreciated risks around the stock.

“Tesla has struggled in the manufacturing, delivering, and servicing of vehicles, implying risk that its edge in the ‘value add’ side will be a moot point,” the analysts Dan Levy and Robert Moon.

Tesla vehicle deliveries versus service footprint.Credit SuisseTesla vehicle deliveries versus service footprint.

Tesla CEO Elon Musk, as well as bullish equity analysts covering the stock, have sought to put concerns over underlying demand to rest.

In an email to employees last Tuesday, Musk said Tesla was close to setting a record for the number of vehicles delivered in one quarter, Business Insider’s Graham Rapier and Mark Matousek reported.

“I think we expect demand to – we are seeing demand returning to normal in Q2,” Musk said on the company’s April earnings call in response to an analyst’s question. “And it might be a little better than normal. It’s – I don’t have a crystal ball, so it’s hard for me to say, but my impression right now is that demand is quite solid, quite strong, yes.”


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