Tesla Deliveries Expected To Set Record But Analysts Predict 2023 EPS Shrinking

Tesla (TSLA) deliveries in the first quarter are expected to set another record, prompting analysts to say Monday that if the global electric-vehicle giant beats estimates Tesla stock could receive a bump. But Wall Street forecasts Tesla 2023 per-share earnings shrinking compared with 2022.

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With Tesla preparing to release first-quarter 2023 delivery and production data in early April, Barclays analyst Dan Levy wrote Monday he expects a “modest” deliveries beat. Wall Street expects around 430,000 Tesla deliveries.

“Concerns have built on the pace of deliveries amid weakening demand signals. However, we believe commentary on the pace of production likely implies some upside, which we assume will be ~430k units in the quarter,” Levy wrote.

“Assuming production only modestly outpaces deliveries (a reasonable assumption, as there was already a large inventory build in 4Q22), it supports upside results vs. consensus,” he added.

Levy wrote that if Tesla deliveries are better than expected, it “could be a catalyst for the stock, as expectations have come down amid signs of softening demand.”

Barclays maintains an “Overweight” rating and a 275 price target for Tesla stock. Citigroup (C) analyst Itay Michaeli on Monday raised the price target on Tesla stock to 192, up from 146. Michaeli maintained a “Neutral” rating on Tesla shares.

Michaeli wrote the EV company’s auto gross margins will give investors a a first look at the impact of Tesla’s price cuts. However, he added the firm doubts Tesla will beat delivery estimates.

Tesla stock surged 3.4% early before reversing. TSLA shares closed up 0.7% to 191.77 Monday during market trade. Shares edged down 0.94% to 190.41 Friday.

Tesla Deliveries

Analysts predict Tesla deliveries to total 430,000 in the first quarter, according to FactSet. This would represent a 39% increase compared to the 310,000 deliveries for the same period in 2022. Wall Street forecasts Tesla deliveries in 2023 to come in around 1.8 million.

Analysts also now expect Tesla full-year earnings to contract compared to 2022. Wall Street predicts earnings sliding around 3% to $3.96 a  share in 2023, down from $4.07 per share in 2022.

Tesla sold 140,453 China-made vehicles in the first two months of the year. The global EV giant exported 57% of those vehicles to Europe and elsewhere.

Meanwhile, Tesla’s lowest-priced vehicle, the Model 3, may lose eligibility to the new $7,500 U.S. EV tax credit at the end of March. Last week, Electrek reported Tesla told employees it expects to lose the credit because the battery comes from China.

Tesla deliveries hit a record 405,278 in the fourth quarter of 2022, jumping 31% vs. a year earlier and nearly 18% vs. the third quarter’s 343,830. Deliveries swelled 40% to 1,313,851 in 2022, but well below the company’s 50% increase goal. Analysts had expected fourth-quarter Tesla deliveries of roughly 420,000.

TSLA Stock

Since March 13, Tesla stock has gained around 10% even as the failures of SVB Financial, Signature Bank of New York and Credit Suisse (CS) trigger worries of broader financial instability. At Monday’s market close, Tesla stock was down around 6.7% on the month.

Prior the bank failures, Tesla sold off hard from March 6 to 10, falling 12.3%. However, Tesla stock found support at its 50-day and 10-week moving averages.

Tesla stock is still forging a bottoming base, below the 200-day line. But that key level is now below the potential 217.75 buy point.

With Tesla deliveries data expected early next week, Moody’s Investors Service upgraded Tesla’s credit rating by one notch to Baa3, giving it investment-grade status from a prior junk rating. S&P Global did the same in October. An investment grade from at least two major credit ratings agencies is considered important.

Moody’s wrote last week the EV giant’s outlook is stable and that it expects free cash flow of more than $7 billion and limited debt through 2025.

“Tesla will remain one of the foremost manufacturers of battery electric vehicles with an expanding global presence and very high profitability,” Moody’s wrote.

TSLA stock ranks third in IBD’s Auto Manufacturers industry group. Tesla has a 86 Composite Rating out of 99. The stock also has a 69 Relative Strength Rating. The EPS Rating is 99.

Please follow Kit Norton on Twitter @KitNorton for more coverage.

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