Deutsche Bank analyst Emmanuel Rosner has expressed concerns about Tesla's performance in the fourth quarter, citing lower sales and volumes as well as delays in Cybertruck production. He has adjusted his revenue and profit expectations accordingly and believes that Tesla will likely only meet Wall Street's projections for fourth-quarter unit sales.
Looking ahead to 2024, Rosner predicts a sluggish year for the electric-vehicle manufacturer. However, he maintains a buy rating on Tesla's stock, based on his optimism for the company's next-generation vehicle platform in 2024. Despite lowering his price target on the stock to $260 from $275, he still sees a potential upside of approximately 6% based on current prices.
Rosner pointed out that even if Tesla meets its fourth-quarter sales expectations, there is still a significant risk to consensus estimates for 2024 due to limited volume growth next year. The company is currently in an intermediate lower-growth period, as acknowledged by Tesla itself.
Tesla's growth in recent years has been driven by the success of the Model 3 and Model Y, both of which are approaching their full volume potential. However, Rosner believes that Tesla's next-generation platform is key to unlocking its next high-growth phase.
In summary, while Tesla faces challenges in the near term, Rosner remains optimistic about the company's long-term prospects.
Deutsche Bank Forecasts Downside Risk to Tesla's Earnings
Deutsche Bank analyst Emmanuel Rosner has expressed concerns about Tesla's earnings expectations, stating that there is "considerable downside risk" due to a lower volume outlook than the market anticipates. Rosner has revised his fourth-quarter revenue projection to $24.7 billion, slightly lower than his initial estimate of $24.9 billion. The decrease is attributed to "lower expectations for average selling prices."
In addition, Rosner has adjusted his fourth-quarter per-share earnings forecast to 69 cents, down from his previous call of 74 cents per share. These projections differ from the FactSet consensus, which expects earnings of 73 cents per share on sales of $25.6 billion.
Looking ahead, Rosner maintains a bearish outlook for Tesla in 2024. He predicts "muted" volume growth and price declines of approximately 6% year over year. This projection takes into account the loss of consumer tax credits for the Model 3 in the U.S. Furthermore, Rosner notes that the Model Y may also face reduced credits.
However, Rosner believes that Tesla's next-generation platform holds promise for the future. While the timing and initial capacity remain uncertain, vehicles built on this platform represent Tesla's "largest growth opportunity." The platform has the potential to support annual production of more than 5 million vehicles and capitalize on its cost superiority compared to other automakers.
Rosner suggests that if Tesla can start deliveries on schedule around late 2025, it could provide sufficient reason for the market to overlook the ex-growth years of 2024-2025.
Tesla is expected to release its production and delivery numbers for Q4 in early January. The FactSet consensus forecasts deliveries of 473,000 vehicles for the fourth quarter.
Despite potential concerns, Tesla shares have performed exceptionally well this year, doubling in value compared to the S&P 500 index, which has only seen a 23% increase.