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and Tesla (NASDAQ:TSLA) The company’s stock price is down 22% so far this year, but 2024 is already proving to be a disappointing year for investors in the EV leader.
Piper Sandler’s Alexander Potter says he doesn’t see any improvement in delivery either. The 5-star analyst revised some of his forecasts downward, now expecting Tesla to deliver 1.93 million vehicles in 2024, compared to his previous forecast of 2.18 million. The new outlook factors in an increase of approximately 119,000 units compared to 2023, which corresponds to a 7% year-on-year increase.
Furthermore, there is no prospect of improvement in the all-important margin aspect. Given the aging of the product line, Potter believes the prospect of further price cuts is all too real. Therefore, the analyst expects 2024 automotive gross margin (excluding credit) to decline 110 bps year-on-year to 16.6%.
In fact, Potter has a bleak outlook for Tesla when evaluating the company’s auto business. “In our view,” Potter said, “no matter how good the Cybertruck or other future vehicles ultimately perform, TSLA cannot rely solely on vehicle manufacturing to achieve sustainable ratings growth.” It is no longer possible to achieve this.” In fact, according to Mr. Potter’s most optimistic calculations, Tesla’s car business is worth no more than $135 per share.
Given the new outlook for auto sales this year, Potter lowered his price target to $225 from $295. Still, it could rise 24% from current levels. Mr. Potter’s rating remains overweight (i.e. buy). (Click here to see Potter’s achievements)
So if Potter only values the EV maker at ~$135 per share, why is his price target set at $225?
The answer is very simple. “It’s important to remember, many bulls own their TSLAs for non-automotive opportunities,” says Potter. “Non-automotive catalysts could (and often do) emerge that facilitate sudden multiple expansions. I think it’s the best.”
The most obvious of these catalysts is Tesla Energy, which appears to be “closest to an upward inflection point,” Potter said. The analyst expects the energy division to generate 12% of the company’s total revenue by 2025, compared to just 6% in 2023, at the same time that the company will eventually It is expected to capture 15% to 20% of the battery adoption.
In general, Potter remains “equally bullish on Tesla’s multi-year outlook,” but not everyone on the street is so confident. Overall, the stock claims a Hold consensus rating based on a combination of 12 Buys, 17 Holds, and 5 Sells. That said, the average price target of $220.26 suggests the stock could appreciate ~14% over the next 12 months. (look Tesla stock price prediction)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. Content is for informational purposes only. It is very important to perform your own analysis before making any investment.
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