Analysts handed Tesla several stock price target reductions early this week. One report predicted gross profit margins would continue falling through at least the fourth quarter. TSLA jumped Tuesday.
Tesla announces its third-quarter earnings and revenue on Oct. 18. Analyst predictions are dropping, after recent delivery data came in well below the revised Wall Street consensus.
On Tuesday, UBS lowered its 12-month Tesla stock price target to 266, down from 290. This comes a month after the firm increased its TSLA target to 290 from 270. Meanwhile, Jefferies also reduced its price target on Tesla stock to 250, from 265. The firm predicts Q3 revenue will total $23.87 billion with EPS of 64 cents.
Tesla stock gained 1.5% to 263.62 Tuesday during market action, moving above an early entry. On Monday, TSLA pared early losses, closing down 0.3% to 259.67. Last week, Tesla stock gained more than 4%.
Last week, Tesla announced it delivered 435,059 during the third quarter, down 6% compared with the second quarter. Tesla sold 74,073 China-made vehicles in September, including exports, according to data released Monday by the China Passenger Car Association. That's down 12% vs. August and a 11% decline compared to 2022.
Wall Street consensus has Tesla third-quarter earnings at 74 cents per share and revenue at $24.32 billion, according to FactSet.
On Monday, Wells Fargo reiterated an equal weight rating on Tesla and cut its 12-month price target on the stock to 260, down from 265.
The firm maintains that Tesla needs around 475,000 unit deliveries in Q4 to reach its 1.8 million unit goal. This will rely on the revamped Model 3 in China and the Cybertruck, which reportedly has 1.9 million preorders, according to Wells Fargo.
Wells Fargo also sees gross profit margins falling to 16.3% in Q3 and "further weakness in Q4," with expectations of profit margins below 15%. The firm also cut its full-year EPS prediction from $3.20 to $2.95 for Tesla.
Tesla has aggressively cut vehicle prices throughout the year, which has dropped auto gross profit margins, excluding regulatory credits, below 20%. Thursday night Tesla surprised Wall Street when it chopped U.S. Model 3 and Model Y prices, reducing the base Model 3 RWD price by $1,250 to $38,990 and the Model Y Long Range by $2,000 to $48,490.
However, Tesla bulls are betting on a fourth-quarter rebound in deliveries with the new Model 3 in China and the expected launch of Cybertruck deliveries. Meanwhile, Morgan Stanley analyst Adam Jonas released a new investor note late Monday speculating on an EV-smartphone convergence.
Market Rally Faces Resistance; Tesla, Nvidia Offer New Entries
Tesla Stock
Jonas maintains an overweight rating on Tesla with a 400 price target. The analyst explained Monday his overweight thesis on Tesla is "heavily dependent on an expansion of the addressable market beyond the point-of-sale/unit x prices business model."
Tesla stock currently resides below a 278.98 buy point in a cup-with-handle base, according to MarketSmith. A move above Thursday's intraday high of 263.20 could offer aggressive investors a new early entry, as the stock price snaps above a downtrend in the handle.
Analysts also maintain that the United Auto Workers strike against Ford, General Motors and Stellantis is good news for Tesla, a nonunion shop.
Tesla stock ranks fourth in the 35-stock IBD Automaker industry group. The S&P 500 component has a 96 Composite Rating out of a best-possible 99. Tesla stock has an 96 Relative Strength Rating and its EPS Rating is 93.
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