Deutsche Bank expects Tesla to miss on all fronts for Q4, cuts PT

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By Senad Karaahmetovic

Deutsche Bank analysts slashed the price target on Tesla (NASDAQ:TSLA) stock to $270 from the prior $355 per share to reflect lowered Q4 deliveries estimate.

The analysts cut estimates to 420,000 electric vehicle (EV) units, implying a 36% year-over-year (YoY) and 22% quarter-over-quarter (QoQ) growth, respectively. They previously expected the EV maker to deliver around 440,000 units.

The new projections take into account “some macro weakness particularly in China, as well as postponement of deliveries to 1Q23 in the U.S from some consumers in order to benefit from IRA incentives,” the analysts wrote in a client note.

As a result, they cut Q4 revenue estimates to $20.8 billion to mirror reduced volume, down from the prior $22.5B. As far as the earnings per share (EPS) forecast is concerned, the analysts now project EPS of $1.05 (vs prior $1.18).

The Street consensus for Tesla’s Q4 numbers currently calls for EPS of $1.25 on revenue of $25.9B. The analysts also went lower on gross margin expectations, from +100 basis points QoQ previously to -30bps QoQ.

“Beyond the quarter, we continue to expect challenging headlines around demand softening and associated price cuts, but think the company remains best positioned to weather the current macroeconomic conditions, leveraging price to support volume growth and various cost levers in place to protect margins,” they added.

However, the analysts at Deutsche Bank remain bullish on Tesla stock long-term, given its leading position in the EV market.

“We continue to view Tesla as an EV leader in the autos sector thanks to its superior cost structure and agility in the midst of challenging macro conditions. In the very near term, it is establishing more cost-efficient capacity to support meaningful growth. In mid-term, the company is looking to launch its next-gen platform which should support multiple other vehicles and segments, as well as robotaxis, and targeting $20k COGS/vehicle,” they concluded.

Tesla stock is up 1.2% in pre-open Wednesday.