Tesla Stock: Analysts Keep Cutting Price Targets As EPS Estimates Fall 24%

Tesla (TSLA) was handed stock price-target reductions early Wednesday and Tuesday with the global EV giant heading toward a likely first quarter delivery miss while full-year earnings predictions have dropped 93 cents since the end of 2023. TSLA shares angled higher Wednesday.

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Citi analyst Itay Michaeli on Wednesday lowered the firm’s price target on Tesla to 196, down from 224, and maintained a neutral rating on the shares. The analyst also cut his first quarter delivery estimates to 429,9000 from 473,300. Michaeli wrote that Tesla’s Q1 “looks tough on aggressive consensus estimates.” He added that Wall Street estimates look too high for 2024 and 2025.

Meanwhile, on Tuesday Bernstein analyst Toni Sacconaghi, who tends to be more bearish on Tesla, lowered his price target to 120 from 150.

That represents a 32% downside to TSLA shares compared to current levels. Sacconaghi kept an underperform rating on Tesla stock.

The Bernstein analyst wrote that Tesla has experienced “soft” demand in China and Europe in Q1 along with “constrained” U.S. Model 3 production. Sacconaghi also trimmed his first quarter deliveries forecast to 426,000 units, down from 490,000. The analyst also projects 2025 EPS of $2.22.

The recent Tesla stock price revisions come as analyst consensus now has 2024 Tesla earnings firmly below 2023’s level. That signals another year of earnings declines for this growth stock. Wall Street currently expects Tesla earnings per share of just $2.88 in 2024, according to FactSet. That would be more than a 7% decline vs. last year’s $3.12.

Wall Street’s 2024 EPS consensus estimates for Tesla have now come down more than 24% since the end of 2023. Some analysts believe earnings could drop even further, potentially around 2021 EPS of $2.26.

However, Canaccord Genuity analyst George Gianarikas on Tuesday sounded a more optimistic tone as he reiterated a Tesla stock price target of 234 and a buy rating.

“We view much of the negatively currently surrounding Tesla as extreme,” Gianarikas wrote. The analyst added that earnings revisions have been “nasty for some time.” However, he also adjusted Q1 delivery estimates to 420,000, down from 441,000.

First Quarter Deliveries Could Be Lower Than Expected

With a week left in the first quarter, Wall Street consensus currently still expects Q1 deliveries of 471,000 units, according to FactSet. However, this number is expected to come down sharply as analysts continue to cut expectations.

Predictions appear to be more around Tesla’s 422,875 number from Q1 2023. The global EV giant hit a record 484,507 deliveries in Q4 2023. The previous quarterly delivery record was in Q2 with 466,140.

Tesla reports Q1 2024 deliveries in early April.

Meanwhile, Bloomberg reported Friday that Tesla is reducing production at the China plant to five days a week from 6.5 days. The output cuts started earlier in March and could continue through April, according to Bloomberg.

The move comes amid slowing EV growth in China and with Tesla’s Shanghai facility already not producing at full capacity.

Morgan Stanley analyst Adam Jonas wrote Monday that if the Bloomberg the report is accurate “it would be yet another sign of oversupply in the world’s largest EV market.”

The analyst added that Tesla could be “witnessing price-cut fatigue with consumers (buyers’ strike) and may be testing profitability levels that the company may not find acceptable.”

“However, we prefer production cuts to price cuts to help balance supply with demand,” Jonas wrote.

Tesla has said it will raise Model Y prices by $1,000 on April 1, with similar modest hikes in Europe and China.

Tesla Stock Has Plunged In 2024, But At Least It’s Cheaper, Right? Nope

Tesla Stock Performance

TSLA shares advanced 1.3% to 179.89 in market action Wednesday. On Tuesday, Tesla rose 2.9% to 177.67 as it started rolling out its latest Full Self-Driving (FSD) update to Tesla customers. TSLA shares, which backed off intraday highs Tuesday, are trading modestly below the 50-day moving average.

Emails from Chief Executive Elon Musk leaked on social media platforms showing he is making it mandatory in North America to install and activate the latest version of FSD on vehicles and take customers on a “short test ride before handing over the car.”

Tesla also announced late Monday it is offering a one-month free trial of FSD in the U.S. for new purchases or existing EVs that are FSD capable.

Last week, Tesla stock gained 4.4%, booking its first weekly advance in three weeks. Two weeks ago, Tesla stock dropped 6.7% to 163.57, hitting new 2024 lows and levels not seen since May 2023. TSLA is down 12% in March and the biggest loser on the S&P 500 index so far in 2024.

The EV giant ranks eighth in the 35-member IBD Auto Manufacturers industry group. The stock has a 34 Composite Rating out of a best-possible 99. Tesla stock also has a 12 Relative Strength Rating and a 68 EPS Rating.

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