Tesla posted record quarterly results on Wednesday evening. Wall Street sounds encouraged.
Justin Sullivan/Getty Images
Tesla
posted better-than-expected fourth-quarter net income. The stock is rising, but gains have little to do with the past. Investors liked what they heard from the company about the future.
Wednesday evening, the electric-vehicles giant reported record net income and earnings per share of $1.19. Wall Street was looking for about $1.13 a share.
Tesla
(ticker: TSLA) stock was up about 6.8% in premarket trading Thursday at $154.18 a share.
S&P 500
and
Nasdaq Composite
futures were up 0.2% and 0.6%, respectively. Investors clearly like the results, and what the company had to say on its earnings conference call—Wall Street seems happy with results, too.
“Demand has been the biggest question entering 2023 after recent price cuts and fear of a macro slowdown,” wrote Baird analyst Ben Kallo in a Wednesday report. “Demand [is] still strong and outpacing production capacity.”
Tesla plans to make about 1.8 million cars in 2023, up from about 1.37 million produced in 2022. That forecasted growth was enough to sooth investors’ nerves. (Coming into Thursday trading, Tesla stock was down about 34% over the past three months.)
Kallo rates Tesla shares Buy. His price target is $252 a share.
Mizuho
analyst Vijay Rakesh also rates shares Buy. His price target is $250 a share.
Rakesh wrote that quarterly profit margins were better than feared in his Thursday research report. Profit margins were a concern for investors after Tesla offered discounts at the end of 2022 and dramatically cut prices at the start of 2023. Rakesh also pointed out that while prices are coming down, Tesla has cost offsets to help cushion the margin impact—including better utilization at two new manufacturing plants and falling raw material prices.
Cowen
analyst Jeffery Osborne rates shares Hold. He took his price target up to $140 from $122 after earnings. He still has concerns about falling vehicle prices and the impact on margins, but noted that Tesla’s energy storage business is looking better than he expected. Tesla deployed 2.5 gigawatt hours of battery storage capacity in the fourth quarter, up 152% year over year.
“Solid results and upbeat demand out of the gate,” is how Wedbush analyst Dan Ives characterized results. He rates shares Buy. He took his price target to $200 from $175 after earnings. Tesla’s demand commentary was what bulls wanted to hear, added Ives. “The bears (for now) will go back into hibernation mode,” he noted.
They will come out of hibernation soon. Next up for Tesla watchers is the company’s event on March 1. Topics will include the next-generation vehicle platform. That should be a lower-priced vehicle that can expand Tesla’s addressable market.
Overall, about 64% of analysts covering Tesla stock rate shares Buy. It’s the highest Buy-rating ratio the stock has had, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 58%.
The average analyst price target is about $206 a share.
Write to Al Root at allen.root@dowjones.com
Credit: marketwatch.com