Deutsche Bank has revised its outlook for Tesla, expressing concerns about the company’s earnings prospects in 2024. While the bank has maintained its “buy” rating for Tesla’s stock, it has adjusted its price target downward to $285 per share, marking a 5% reduction from its previous target of $300. This adjustment primarily stems from a more conservative outlook on Tesla’s production in the coming year.
Deutsche Bank’s latest predictions suggest that Tesla is likely to report deliveries of 440,000 units in the third quarter, which falls short of previous estimates of 455,000 units. Consequently, this could lead to lower quarterly revenue, now expected to be around $23.3 billion, down from the bank’s earlier estimate of $24.1 billion. Additionally, the bank anticipates a drop in earnings per share to $0.71, a decrease from Wall Street’s projection of $0.87 per share.
The analysts at Deutsche Bank have expressed concerns about the outlook for 2024, citing substantial downside risks to earnings expectations, primarily due to a less optimistic volume forecast than what the market currently assumes. They have pointed out that Tesla indicated during an investor meeting that it no longer plans to ramp up production at its Austin and Berlin factories to 10,000 units per week in the next year.
As a result, the bank has revised its production estimate for Tesla in 2024 to 2.1 million units, down from the consensus expectation of 2.3 million units. However, on a positive note, Tesla might experience less pricing pressure in the coming year, leading to a modest 1% reduction in car prices. Deutsche Bank envisions earnings per share of $3.90 in 2024, which is lower than the consensus estimate of $4.76.
The analysts at Deutsche Bank have emphasized that Tesla’s next-generation vehicle platform will be pivotal in driving further growth for the company. They highlight that investors are closely monitoring the rollout of these next-gen vehicles, as they hold the key to Tesla’s future success.
“Beyond 2024, all eyes remain on Tesla’s next-gen platform,” the analysts noted. “However, maintaining the timeline through 2025 is crucial, in our view, for investors to look past the challenges of 2024 and perceive it as a transitional year.”
Tesla has experienced a robust surge in its stock price throughout 2023, rebounding strongly from a challenging period in 2022. This resurgence can be attributed to Wall Street’s optimism regarding artificial intelligence and renewed enthusiasm for high-growth stocks. As of Wednesday, Tesla’s stock was trading at approximately $235 per share, reflecting a remarkable 118% increase since the beginning of the year.
