On Tuesday, TD (TSX:TD) Cowen maintained a Hold rating on Tesla (NASDAQ:TSLA) but reduced the price target to $160 from $180. This adjustment comes in the wake of Tesla's first quarter delivery report, which showed a shortfall in the number of vehicles delivered. The electric vehicle manufacturer reported deliveries of 386.8 thousand units in the first quarter of 2024, marking a 12.7% miss from the consensus gathered by investor relations (IR) and an 8.5% year-over-year decline. This is the first year-over-year decrease in quarterly deliveries since the second quarter of 2020.
The lower delivery numbers have been attributed to weaker demand and rising competition in the electric vehicle market. Additionally, inventory levels have increased, with inventory days expanding to 27 in the first quarter of 2024, up from 15 in the previous quarter. As Tesla prepares to report its earnings on April 23, the focus will likely be on whether the management will maintain its delivery growth outlook for the rest of the year following a disappointing start.
Investor relations had previously collected a consensus estimate for Tesla's 2024 deliveries at 2.00 million units, suggesting a 10.6% growth. However, TD Cowen has adjusted its own estimate to 1.81 million units, which would be flat compared to the previous year, down from an earlier projection of 2.03 million. Looking further ahead, the consensus estimates for 2025 and 2026 are 2.34 million and 2.85 million deliveries respectively, indicating an anticipated demand recovery and the introduction of a less expensive model in the second half of 2025 as part of Tesla's next-generation platform development.
The revised price target of $160 by TD Cowen is based on a valuation of 23 times the fiscal year 2025 estimated enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) and 37 times the fiscal year 2025 estimated price to earnings (P/E).
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