Tesla On Track To Beat Q3 Earnings Estimates on Record Deliveries
The California-based electric vehicle and clean energy company Tesla is expected to report its third-quarter earnings of $1.52 per share, which represents year-over-year growth of 100% from $0.76 per share seen in the same period a year ago.
The high-performance electric vehicle manufacturer would report revenue of $13.16 billion. The electric vehicle producer has beaten earnings three times in the last four quarters.
According to ZACKS Research, vehicle demand is on the increase as the economy is recovering from pandemic lows and consumers are preferring personal mobility. Tesla delivered 241,300 vehicles in the third quarter of this year, up from 139,539 cars a year earlier. During the quarter, the company’s Solar Roof and Powerwall products are also expected to see exponential growth.
Tesla shares, which surged nearly 20% so far this year, closed 3% higher at $843.03 on Friday.
“We expect Tesla will be upbeat in 3Q21 given record deliveries beating estimates by ~20k announced in early October. Furthermore, the company announced record sales of 56,000 in China with a total of 133,248 or 55% of total deliveries for the quarter coming from their Shanghai facility,” noted Jeffrey Osborne, equity analyst at Cowen.
“We look forward to management’s commentary on Tesla’s internal chip production strategy and capacity expansion plans. We also look forward to an update on the opening of the Berlin Gigafactory. Additionally, we look forward to an update on Tesla’s 4680 cells and the incremental deployment of its beta FSD. Finally, we look forward to an update on the timeline for Semi and Cyber truck release.”
Tesla Stock Price Forecast
Twenty-six analysts who offered stock ratings for Tesla in the last three months forecast the average price in 12 months of $699.81 with a high forecast of $1,200.00 and a low forecast of $150.00.
The average price target represents a -16.99% change from the last price of $843.03. From those 26 analysts, 12 rated “Buy”, seven rated “Hold” while seven rated “Sell”, according to Tipranks.
Morgan Stanley gave the base target price of $900 with a high of $1,272 under a bull scenario and $450 under the worst-case scenario. The firm gave an “Overweight” rating on the electric vehicle producer’s stock.
“A double-fly-wheel. We believe Tesla can leverage its cost leadership in EVs to aggressively expand its user base, over time generating a higher % of revenue from recurring/high-margin services revenue,” noted Adam Jonas, equity analyst at Morgan Stanley.
“Services drives the upside. We forecast Tesla’s network services EBITDA as a % of total TSLA EBITDA to reach 10% by 2025, ~19% by 2030 and ~37% by 2040. Tesla Service revenue includes automated driving, infotainment, upgrades, supercharging, maintenance, telematics, etc. Valuation supportive vs. tech. Including Network Services, Energy & Insurance to our core auto forecast, at $900 Tesla trades at ~28x EV/EBITDA in 2025 and ~6x 2025 sales. Expensive vs. auto but not vs. software/tech comps.”
Several other analysts have also updated their stock outlook. Canaccord Genuity lifted the price target to $940 from $768. JPMorgan upped the target price to $215 from $180. Jefferies raised the price objective to $950 from $850.
“We raise EBIT estimates 7-9% for 2022-23 and PT to $950 on the higher capacity ramp and sustained demand, following further analysis of Q3 data and various sources of information on the soon-to-be-launched Berlin facility,” noted Philippe Houchois, equity analyst at Jefferies.
“For some time the narrative has been legacy OEMs closing the gap; we see little evidence as Tesla continues to challenge at multiple levels. We raise EBIT and margin estimates in contrast with doubts about earnings momentum across legacy OEMs.”
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