Goldman Sachs Sees Ford (F) and Tesla (TSLA) Beating EPS Estimates

January 24, 2022 10:17 AM EST
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Goldman Sachs analyst Mark Delaney has reflected on the US carmakers ahead of the Q4 earnings season.

The analyst expects to see investors focusing on supply chain issues, which is creating headwinds on both revenue growth and profitability. Overall, Delaney expects conservative guidance from companies amid ongoing supply chain pressures.

“While we expect 4Q21 results to be solid as auto production improved sequentially (and by more than most suppliers guided to) and vehicle pricing stayed strong, our 1Q22 EPS estimates are consistently below the Street for auto tier 1s and electronic components companies given input cost pressures and continued supply chain challenges. We also believe parts of the supply chain like auto tier 1s have excess inventory stemming from inefficiencies that the chip shortage has created (e.g. incomplete kitting and WIP), and this could impact electronic components sales that often ship to tier 1s,” Delaney said in a client note.

In case companies provide weaker-than-expected guidance, Delaney sees this as a buying opportunity “especially if Street estimates are reset, as we believe chip shortages will moderate in 2H and allow for improved auto production (and we believe that auto production will increase again in 2023 with volumes still well below historical levels and final vehicle inventory low).”

The analyst is particularly bullish on Ford (NYSE: F) and Tesla (NASDAQ: TSLA) with GS 2022 EPS estimates above the Street for both.

By Senad Karaahmetovic | [email protected]



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