Piper Sandler analyst Alexander Potter has maintained an Overweight rating for Tesla Inc, but lowered the price forecast from $450 to $400. This decision comes ahead of the company’s first-quarter earnings report, which is expected to underwhelm due to lower-than-expected deliveries.
First-Quarter Earnings Expected to Disappoint
The company’s deliveries of 337,000 units fell short of consensus estimates of 378,000 units, which will likely impact the gross margin. Additionally, the lack of specifications and pricing for the upcoming “Model 2” makes it challenging to rely on new products for delivery growth.
Catalysts on the Horizon
Despite the bearish outlook for the next 2-3 months, Potter highlights that Tesla could rally sharply when “big picture” catalysts emerge. Some major catalysts, such as new products and robotaxis, are on the horizon and will likely have a positive impact on the company’s stock.
Updated Earnings Estimates
Potter has updated his thoughts ahead of the first-quarter earnings report, scheduled for April 22. He expects 2025 and 2026 deliveries of 1.74 million units and 2.09 million units, respectively, which is lower than his previous estimates. The analyst has also slashed his EPS estimates to reflect lower deliveries and a slower margin ramp.
Key Takeaways
- Potter maintains an Overweight rating for Tesla Inc with a lowered price forecast of $400
- First-quarter earnings are expected to disappoint due to lower-than-expected deliveries
- New products and robotaxis are potential catalysts that could positively impact the company’s stock
- Updated earnings estimates reflect lower deliveries and a slower margin ramp
Current Stock Performance
TSLA stock is currently down 7.23% at $235.78. Despite the negative outlook, a single robo-taxi headline could change the narrative and positively impact the stock.
Future Outlook
Full self-driving (FSD) software accounts for the bulk of Potter’s 20-year profit outlook, and robotaxi catalysts have an outsized impact. The analyst projects first-quarter revenue of $20.29 billion and EPS of $0.36. As the company continues to develop and launch new products, its growth prospects remain intact despite the first-quarter earnings miss.