Electric vehicle giant Tesla Inc
Analysts are sizing up the report and what's ahead for the company.
The Tesla Analysts: Baird analyst Ben Kallo has an Outperform rating and price target of $300
RBC Capital analyst Tom Narayan has an Outperform rating and price target of $305.
Wedbush analyst Dan Ives has an Outperform rating and price target of $300.
Needham analyst Chris Pierce has a Hold rating and no price target.
Bernstein analyst Toni Sacconaghi has an Underperform rating and price target of $150.
Morgan Stanley analyst Adam Jonas has an Equal-weight rating and price target of $250.
Baird on Tesla: Kallo calls the second quarter a beat and maintains Tesla as a "Best Pick" for the second half of 2023. The analyst notes the caution from the company and its margins remain a concern.
"Management reiterated its cautions tone regarding the macroeconomic backdrop for 2H, but we are encouraged by TSLA's cost improvements and continue to believe that it is well positioned," Kallo said.
Kallo estimates that 75,000 Cybertrucks will be delivered in 2024.
The analyst expects the stock to trade down based on lower volume production and the announcement of FSD transferability in the third quarter.
"(We) would use any pullback to accumulate shares."
RBC Capital on Tesla: Narayan said Tesla's gross margins came in above estimates, despite a focus on lower prices from the company.
"EBIT margins did come in below, but we suspect this came from higher R&D expense which is likely tied to autonomy ambitions. We also remind investors that Tesla is posting double-digit EBIT margins and selling 100% EVs," Narayan said.
The analyst said Tesla remains on track to hit 1.8 million deliveries for the fiscal year, a figure it can hit if it maintains its second quarter run rate.
"We suspect this could be viewed negatively by some investors."
Narayan said the comments by Tesla CEO Elon Musk that the company is in discussions with a major OEM to license FSD is important.
"We believe FSD licensing could be a significant part of Tesla's long term investment thesis and expect this to come with lower pricing which should result in higher attach rate."
Wedbush on Tesla: Ives said Tesla delivered a "goldilocks" second quarter, with margins coming in higher than expected by analysts.
"The automotive ex-credits gross margin beat was front and center and is clearly an indication that Musk & Co continue to play chess while other EV players are playing checkers," Ives said.
The analyst said he believes Tesla is seeing strong demand after price cuts in the United States and China and margins could stabilize over the next two quarters.
"We believe the supercharger network represents a large monetization opportunity for the company in its growth story, adding to its sum-of-the-parts valuation."
Needham on Tesla: Pierce maintains a Hold rating on Tesla after the second quarter report, although he expresses a slight bullish tilt when contrasting the electric car manufacturer with traditional automakers. One reason for the Hold rating is the company's full-self driving.
"We are miles from being a true believer in the technology, putting us in the company of the majority of institutional investors that we speak with," Pierce said.
The analyst also said that Cybertruck production could come in below consensus estimates, adding downside to valuation models.
Bernstein on Tesla: Sacconaghi said Tesla's second quarter results were mixed and "not really getting better."
The analyst notes that auto gross margins were below consensus estimates.
"Executives' tone on the call continued to be cautious, with the company underscoring its lack of visibility into macro conditions," Sacconaghi said.
The analyst said the company removed its outlook on operating margins and didn't note when margins might bottom.
"While Tesla is increasingly exploring other demand creation levers besides MSRP cuts, we continue to believe that the company will need to further lower prices this year and/or next year to achieve its volume targets."
The analyst said the market is valuing Tesla as an artificial intelligence company alongside its automotive business, and may be putting too much weight into its charging partnerships.
"We see neither as financially material for Tesla."
Morgan Stanley on Tesla: Jonas shared five key takeaways from Tesla's second-quarter earnings report:
1. Tesla open to licensing FSD
2. AI theme mentioned frequently during earnings call
3. More focus on Dojo and neural net training for FSD
4. Cybertruk ramp expectations managed
5. Cautious tone of consumer environment
"A potential licensing of FSD would represent an important change of scope in how investors measure the TAM for Tesla," Jonas said.
The analyst pointed out that the commentary on Cybertruck production highlights a gradual increase planned through the year 2025.
"We remain EW given a balanced risk reward."
TSLA Price Action: Tesla shares are down 5.8% to $274.22 at the time of publication on Thursday.
