Piper Sandler cuts price target on Tesla (TSLA) following 10-Q filing

Piper Sandler reiterated an Overweight rating on Tesla (NASDAQ: TSLA) and cut their price target on the stock to $280.00 (From $300.00) to reflect information extracted from the electric automaker’s 10-Q filing.

Analyst Alexander Potter wrote in a note, “Most investors will be unsurprised to learn that our 2023-2025 estimates are moving lower, to reflect price cuts and a coincident impact on margins. Since the Q1 call, investors have fretted about Tesla's willingness to trade price for volume, and while we share management's view that margins will eventually rise due to software, this won't occur quickly enough to offset the near-term impact of lower prices, higher warranty costs, and slower inventory turnover. On the bright side, we think global ASP could fall by ~$125/unit every quarter for the next 2 years without impacting margins, due to production credits under the Inflation Reduction Act (IRA).”

With prices and margins falling, Potter believes that the valuation could languish for a few months. However, until margins and other fundamentals start improving, potter believes that TSLA may struggle to "catch a bid". TSLA is still a favored stock at Piper Sandler. By 2H23 and beyond, Potter thinks investors will come around.

Shares of TSLA are down 0.53% in pre-market trading on Tuesday.

By Michael Elkins | [email protected]

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