Tesla
crushed second quarter delivery expectations. Wall Street is impressed, but some analysts still have questions about demand and inventories.
Tesla
(ticker: TSLA) announced second quarter deliveries of just over 466,000 units, a record and about 4% to 5% higher than the roughly 445,000 to 447,000 units Wall Street was looking for. It was the biggest quarterly delivery beat since the fourth quarter of 2021, according to Bernstein analyst Toni Sacconaghi.
Shares are 6.3% higher in premarket trading while
S&P 500
and
Nasdaq Composite
futures are up 1.2% and 0.1% respectively.
Baird analyst Ben Kallo wrote Sunday he was feeling cautious going into the delivery report “given stock performance coupled with the sentiment on sell-side.” Tesla stock finished the first half of 2023 up 113%, cruising past most Wall Street price targets. The strong price performance is one reason Tesla shares were downgraded a few times over the past couple of weeks. But for Kallo, the delivery number offset “concerns about second quarter financials” and he expected the stock to trade higher Monday.
Wedbush analyst Dan Ives expected the shares to move higher too. The result “will send [Tesla] bears into hibernation mode,” he wrote in a Sunday report, telling Barron’s he expected shares to rise ahead of the July 4th holiday in the U.S. “Bears were expecting a bad print,” he says. “This was a trophy case quarter [for Tesla].”
Ives and Kallo rate Tesla shares Buy. Kallo’s price target is $252 a share. Ives has a $300 price target for Tesla stock. Bernstein’s Sacconaghi rates shares Sell. His price target is $150 a share.
Sacconaghi was impressed by the print, but still has his concerns. “Despite significant price cuts and quarter-end promotions in the second quarter, lead times on all Tesla models are low,” wrote the analyst. “We believe the company drew down backlog in the second quarter.” That means deliveries were greater than orders. Combined with low lead times he is still worried about demand.
Inventory is another concern for TD Cowen analyst Jeffrey Osborne. Tesla produced13,560 more cars that it delivered. It’s the fifth consecutive quarter production exceeded deliveries and the fourth consecutive quarter production exceeded deliveries by more than 10,000 units. “We expect investors will continue to focus on deliveries though note increased inventories may weigh on the degree of an expected positive reaction,” wrote Osborne in a Sunday report.
He rates shares Hold and has a $150 price target for the stock.
Overall, about 40% of analysts covering Tesla stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target is about $212 a share.
Write to Al Root at [email protected]
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