Tesla Earnings ‘Disappointed.’ Why Analysts Are Raising Their Price Targets.

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Tesla

stock was falling Thursday after reporting better-than-expected fourth-quarter earnings Wednesday evening, a sign that the numbers still managed to disappoint investors. Wall Street analysts, however, seemed far from disappointed, as a handful of raised their price targets for Tesla stock. Rising target prices, however, might not be good enough to boost shares in the short run.

Tesla (ticker: TSLA) shares were down about 0.8% in premarket trading Thursday.

S&P 500
futures were up 0.1%, while

Dow Jones Industrial Average
futures were down 0.2%, and the

Nasdaq Composite
had advanced 0.4%.

It’s a mute reaction, so far, to the company reporting $2.54 in per-share earnings from $17.7 billion in sales for the fourth quarter. Wall Street was looking for $2.36 a share from $17.1 billion in sales. It’s the company’s fourth consecutive earnings “beat.”

Piper Sandler analyst Alexander Potter maintained his Buy rating on shares and $1,300 price target despite calling the quarter not “completely flawless.” Supply-chain problems persist, adding cost, and new product rollouts, such as Cybertruck, are happing more slowly than some expect.

Baird analyst Ben Kallo also noted supply chain headwinds in his Thursday report following earnings, but was encouraged by management’s goal to grow volumes more than 50% in 2022. That implies 2022 deliveries of 1.4 million units. Kallo also maintained his Buy rating and raised an older price target to $1,108 from $888.

Kallo had his $888 target since October. Not all analysts change estimates and targets at the same rate.

Wells Fargo analyst Colin Langan also raised his Tesla price target to $910 from $860 a share. He kept his Hold rating on Tesla stock. Tesla CEO Elon Musk said Wednesday he’s confident Tesla will have truly self-driving cars by the end of 2022. Langan is skeptical. He still increased his price target because his 2022 earnings estimates went up following the quarter. Langan sees Tesla earnings $7.85 a share in 2022, up from $6.90 a share.

That’s a relatively low estimate. Overall, Wall Street expects Tesla to earn $10 a share in 2022. That estimate is up from about $8.40 a share three months ago. Rising estimates is probably the biggest factor in rising target prices. The average analyst target price for Tesla stock has risen to $967 a share from $758 a share over the past three months.

The average analyst target price is up about $13 a share after analysts digested Wednesday’s fourth-quarter earnings. The 2022 consensus earnings estimate is up about 25 cents a share in response to earnings.

Interestingly, the most bullish analysts, including Potter, don’t seem to be increasing target prices post earnings. The more bearish analysts, such as Langan, are the ones making larger adjustments.

New Street Research analyst Pierre Ferragu is a Tesla bull. He maintained his Buy rating and $1,580 price target for the stock calling the quarter a “comfortable” beat. Wedbush analyst Dan Ives, another bull, also maintained his Buy rating and $1,400 price target after the quarter. He called the quarter “stellar.”

Morgan Stanley analyst Adam Jonas didn’t appear to go as far as stellar, but still heaped praise on the company in his Wednesday report following earnings. He called Tesla an “EV cash machine …with just two cars and two plants.” in a Wednesday report following earnings.

The cars are the Model 3 and Model Y. Tesla makes Model S and X vehicles, but those are lower volume models. Tesla makes cars in Fremont, California and Shanghai, but is starting up two new plants in Austin, Texas and Germany.

“Nothing truly narrative changing for Tesla bulls” from the quarter added Jonas. He left his $8.84 per share 2022 earnings estimate unchanged as well as his $1,300 price target. Jonas rates Tesla stock Buy.

Overall, about 46% of analysts covering Tesla stock rate share Buy. The average Buy rating ratio for stocks in the S&P is about 58%. No one upgraded or downgraded Tesla stock following earnings, according to Bloomberg data.

Write to Al Root at [email protected]