On Wednesday, Bernstein SocGen Group maintained its Underperform rating on Tesla shares (NASDAQ:TSLA) with a steady price target of $120.00. The firm expressed skepticism about Tesla's growth prospects, particularly in terms of unit sales for the current year. Despite the potential for lower prices and favorable financing, Bernstein SocGen Group highlighted that achieving positive unit growth would still fall significantly short of Tesla's initial goal of maintaining over 50% unit growth annually.
The firm pointed out that earnings per share (EPS) estimates for the fiscal year 2024 have dropped from nearly $7 in late 2022 to approximately $2. This shift in expectations comes as investor attention has turned towards Tesla's ambitions in the robotaxi market. Tesla's stock experienced a 34% decrease from January 1 to April 5; however, it has since risen by 56% following the announcement of the upcoming Robo-Taxi day.
Bernstein SocGen Group remains unconvinced that Tesla will outpace competitors in delivering Level 4 autonomous robotaxis and ultimately dominate the autonomy and robotaxi space. Looking ahead to 2025, the firm anticipates challenges for Tesla, not expecting the arrival of a lower-cost Model 2 in significant volumes until 2026. Furthermore, the new "lower cost" models set to begin production in the first half of 2025 are expected to be modest revisions that may not substantially alter Tesla's demand dynamics.
For the fiscal year 2025, Bernstein SocGen Group forecasts Tesla will produce 1.97 million units and achieve an EPS of $2.62. This projection is roughly 60% lower than what would have been anticipated if Tesla had maintained its targeted compound annual growth rate (CAGR) of 50% set in 2021. The firm's analysis indicates cautious expectations for Tesla's performance in the near future, aligning with its reiterated Underperform rating and unchanged price target.
In other recent news, Tesla's third-quarter delivery numbers showed a marginal increase of 0.2% over the consensus, reaching a total of 462.9k units. Despite this, the figures were below some expectations, which were closer to 470k. TD (TSX:TD) Cowen, maintaining a Hold rating, revised its estimates for Tesla, adopting a cautious stance on volume and average selling price. On the other hand, Stifel maintained a Buy rating, aligning closely with the delivery results.
Tesla's energy storage segment deployed 6.9 GWh, which met market predictions but marked a decline from the previous quarter's 9.4 GWh. Evercore projects earnings per share for Tesla in the range of 57 to 59 cents.
The company has also been preparing for its Robotaxi event, expected to provide insights into Tesla's advancements in autonomous driving technology. Barclays (LON:BARC) maintained an Equalweight rating on Tesla shares, attributing the delivery miss to weaker performance in the Model S, Model X, and Cybertruck lines.
Tesla also recently won a dismissal of a shareholder lawsuit alleging fraud over self-driving technology claims and increased its market share in Sweden to 8.5% in 2024, up from 7.8% the previous year. Wedbush reiterated its Outperform rating on Tesla shares, emphasizing the potential value of Tesla's advancements in artificial intelligence and Full Self-Driving technology.
InvestingPro Insights
Recent InvestingPro data provides additional context to Bernstein SocGen Group's analysis of Tesla (NASDAQ:TSLA). As of the latest quarter, Tesla's P/E ratio stands at 63.97, indicating that the stock is trading at a high earnings multiple. This aligns with one of the InvestingPro Tips, which notes that Tesla is "Trading at a high P/E ratio relative to near-term earnings growth."
The company's revenue for the last twelve months reached $95.32 billion, with a modest growth of 1.37%. This slow growth rate supports Bernstein SocGen Group's concerns about Tesla's ability to meet its ambitious growth targets. Additionally, the InvestingPro Tip highlighting that "Net income is expected to drop this year" further corroborates the firm's cautious outlook.
Despite these challenges, Tesla maintains a strong financial position. An InvestingPro Tip reveals that the company "Holds more cash than debt on its balance sheet," which could provide flexibility as it navigates the competitive landscape of the automotive and autonomous vehicle markets.
For investors seeking a more comprehensive analysis, InvestingPro offers 19 additional tips on Tesla, providing a deeper understanding of the company's financial health and market position.
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