Tesla's (TSLA) PT Cut at Credit Suisse on Short-Term Issues, but 'Long-Term Bull Thesis Intact'

June 24, 2022 7:28 AM EDT
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Dan Levy of Credit Suisse cuts his price target on Tesla (NASDAQ: TSLA) to $1,000 from $1,150 Friday adjusting for “lower deliveries outlook, the associated margin impact, and an expected Bitcoin impairment" in Q2, but maintains an "Outperform" rating noting "long-term fundamentals are intact."

The analyst affirms that supply chain issues and COVID lockdowns in China present significant short-term hurdles and sees a big drag on Q2 deliveries: "Our estimate is below consensus ~280k and is solidly below 1Q’22 deliveries of 320k; it also reflects a decline vs. our prior modeled estimate of 295k." He thus reduces "2Q EPS estimate to $1.10 from $2.06, and below consensus $2.08" – one of key reasons behind the price target cut.

Nonetheless, Credit Suisse maintains the "thesis that robust fundamentals ahead should outweigh the near-term challenges for Tesla such as the recent growth sell-off, production disruptions in China, lingering semiconductor shortage, and magnified inflationary pressures."

The analyst further notes that supply chain issues, currently the industry’s most significant headwind, may end up being Tesla’s tailwind, extending the company’s "lead over other OEMs in the race to EV… given its lead in vertical integration and its prior EV experience."

The analyst thus reiterates an “Outperform” rating on the stock, noting “we believe the long-term case for Tesla is clear.”

Between controversial moves by the company’s CEO Elon Musk, industry-wide supply chain issues and broader economic woes, Tesla has had a rough first half of 2022, with the stock down over 41% YTD, compared to a 21% loss for S&P500. As of yesterday, shares closed at $705.21 versus an all-time high of $1,243.49.

By Vlad Schepkov

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