- Tesla missed analyst estimates for first-quarter results on Wednesday.
- Some Wall Street analysts have downgraded the stock or cutting their price targets.
- Others, like Chris Eberle of Nomura Instinet, are remaining optimistic.
There’s still a visible path to recovery after Tesla’s dismal first-quarter earnings report, according to one Wall Street analyst.
While the disappointing financials led to some downgrades and price target reductions, Nomura’s Chris Eberle remains bullish.
“Management seemed confident in their near-term visibility, in particular, which is encouraging given that the second quarter is already nearly one-third complete,” he said in a note to clients Thursday. “Tesla also noted that it expects positive FCF in every remaining quarter in 2019, including 2Q, which we think is likely. Overall, we believe that Tesla’s reiterated FY19 outlook is achievable, albeit challenging, and maintain our Neutral rating and $US300 target price.”
Earlier in the week, Tesla hosted an autonomy day for investors to show off its latest plans for self-driving, including a million-strong network of robo-taxis. However, the lack of details from executives led the firm Evercore ISI to downgrade its view and slash its price target for the stock by a hefty $US90.
Eberle says the demand fears cited by Evercore in its pullback are already addressed by Nomura delivery day.
“Data we have reviewed exiting March showed acceleration in Europe, particularly in markets in which Tesla has had only modest success in the past (Germany, France, Spain),” he said. “Furthermore, Model 3 gross margin declined only slightly QoQ, despite what we estimate was considerable ASP compression in the U.S.”
Eberle’s price target reflects a 16% increase from where shares of Tesla are set to open Thursday. His $US300 valuation is just slightly above Wall Street’s average price target, according to Bloomberg Data. Consensus targets have fallen drastically in recent months, down to $US297 today.
“Over Tesla’s history, step-function increases in the share price have coincided with steep increases in expected unit volumes, and Tesla’s reiterated full-year outlook would qualify,” Eberle said. “In 2012, TSLA shares appreciated over 4 times, as sales expectations went from effectively zero to 100,000 per year. And in 2016, the stock gained again (approximately 90% from late-2016 to mid-2017) as investors began to conceptualize annual vehicle sales of 500,000 units.”
Shares of Tesla fell about 0.6% overnight following the company’s first quarter earnings release.
More from Tesla’s earnings:
- Elon Musk said now is ‘probably’ around the right time to raise capital
- Tesla just reported an abysmal quarter with Model S and Model X sales falling off a cliff
- Elon Musk says Tesla will begin offering its own insurance to customers next month
- Tesla posts huge loss, says deliveries are still on track despite ‘aggressive schedule’
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