Tesla (TSLA) PT Raised to $132 at Guggenheim
Guggenheim analyst Ronald Jewsikow raised the price target on Tesla (NASDAQ: TSLA) to $132.00 (from $125.00) while maintaining a Sell rating.
The analyst commented, "We are updating numbers for TSLA to reflect the latest delivery trends, pricing and other items. 4Q23: We see deliveries tracking in line with 1.8 million unit guidance, led by strong China trends, a strong November in Europe (sustainable?) and continued softness in the US. On the pricing front, we believe pricing is tracking in line with our prior expectations of -150bps q/q, but mix and ATPs track modestly weaker. While we are sanguine on intra-quarter trends, US softness (price and negative mix) is particularly concerning given it has the potential to be the largest supply growth market in 2024/25. Finally, on FY24 guidance, we see an upper bound on FY24 volumes in the 2.2-2.3mn range (capacity), but believe a more prudent guide would center around 2.0-2.1mn units, which likely disappoints growth investors and offers a sobering reality that TSLA's current model lineup is demand constrained. Even at 2.1mn units (+17% y/y units), we believe negative pricing will be required based on demand elasticity trends, the potential loss of favorable tax credits on ~25-30% of US volumes, and the considerable demand pull forward benefits in FY23 from price cutting. On the lost tax credit specifically, our analysis suggests that for every $1,000 in lost pricing on these models, the associated gross margin impact is ~25bps and while we do not expect the full $7,500 in lost tax credits to be reflected in lower pricing (here), it is a headwind. Overall, a large focus of our conversations with investors has centered around the TSLA path to grow not just in 2024, but 2025, which is a challenging narrative for a stock trading at 77X/59X our 2024/2025 EPS estimates. We expect the bull thesis (beyond longer-term items) to shift to TSLA interest rate sensitivity (long duration equity + financing reliant product), but lower rates will likely only marginally support demand, in our view. Remain SELL rated, but raise our PT to $132 from $125 primarily on a lower discount rate."