On Thursday, Cantor Fitzgerald updated its stance on Tesla (NASDAQ:TSLA), increasing the electric vehicle maker's price target to $255 from $245. The firm maintained a Neutral rating on the shares. The revision in the price target reflects Tesla's higher gross margins, reduced operating expenses, and the quicker pace of Cybertruck deliveries.
The analyst at Cantor Fitzgerald highlighted Tesla's performance, noting that the company surpassed earnings before interest, taxes, depreciation, and amortization (EBITDA) and gross margin expectations. Tesla's earnings per share (EPS) also beat the consensus. The reaffirmation of the start of production of lower-cost vehicles in the first half of 2025 was seen as an important positive development for the company's future.
Tesla has projected a modest increase in vehicle deliveries for 2024 and expects its energy storage deployments to more than double year-over-year. While the firm sees the potential for future revenues from Full Self-Driving (FSD) and Robotaxi services, it remains neutral on the stock's valuation in the short term.
This stance is due to uncertainties regarding the Robotaxi fleet's size and rollout timing, as well as the adoption rate and penetration of FSD technology.
Cantor Fitzgerald has adjusted its forecasts for Tesla's vehicle deliveries, now expecting 520,844 units in Q4 and approximately 1.81 million for the full year 2024, a slight decrease from the previous estimate of around 1.82 million. This adjustment leads to a projected FY24 revenue of about $100.3 billion, down from the prior estimate of approximately $101.2 billion.
For FY25, the firm anticipates 2.05 million deliveries, resulting in projected revenue of approximately $117.2 billion, which is a decrease from the previous forecast of $127.7 billion. Additionally, the FY24 gross margin forecast has been raised to 18.6% from 17.9%.
The valuation of Tesla by Cantor Fitzgerald is based on a 10-year discounted cash flow (DCF) model with an 11% discount rate and a long-term growth rate of 2%. The report also outlines key risks for Tesla, including competition from Chinese original equipment manufacturers (OEMs), regulatory approval for FSD and Robotaxi services, potential supply chain disruptions, and a slowdown in electric vehicle demand.
In other recent news, Tesla Inc. reported a strong third quarter, with record deliveries, substantial financial growth, and significant advancements in technology. The company's optimistic forecast projects a 20-30% increase in sales for the next year.
Tesla also announced plans for future vehicle models, including the Cybertruck, Cybercab, and a new affordable vehicle model priced under $30,000, planned for the first half of 2024. The company's Q3 operating cash flows reached $6.3 billion, with energy margins over 30%.
Tesla's positive performance had a ripple effect on other technology sector heavyweights, often referred to as the Magnificent Seven. Nvidia Corp (NASDAQ:NVDA) saw a 1.3% rise, Amazon.com Inc (NASDAQ:AMZN)'s stock increased by 0.6%, and Meta Platforms Inc (NASDAQ:META) enjoyed a 0.9% gain.
In other recent developments, Boeing (NYSE:BA) Co's shares fell by 3% following factory workers' decision to reject a contract offer, prolonging a strike that has exacerbated the aerospace company's losses. International Business Machines Corp (NYSE:IBM)'s stock declined by 4.3% due to its failure to meet revenue estimates for the third quarter.
Additionally, Newmont Corporation's shares dropped 5.4% as the gold producer faced higher costs and reduced output from its Nevada operations, leading to a profit shortfall.
InvestingPro Insights
To complement Cantor Fitzgerald's analysis, InvestingPro data provides additional context on Tesla's financial position and market performance. Tesla's market capitalization stands at $682.53 billion, reflecting its significant presence in the automotive industry. The company's P/E ratio of 54.8 aligns with Cantor Fitzgerald's observation of a high valuation, which may explain their neutral stance.
InvestingPro Tips highlight that Tesla "holds more cash than debt on its balance sheet" and that "cash flows can sufficiently cover interest payments." These factors support the company's financial stability as it pursues ambitious projects like the Cybertruck and lower-cost vehicles.
However, an InvestingPro Tip notes that "9 analysts have revised their earnings downwards for the upcoming period," which could be related to the firm's adjusted forecasts for Tesla's deliveries and revenue. Additionally, Tesla's "gross profit margin of 17.72%" for the last twelve months as of Q2 2024 is close to Cantor Fitzgerald's raised FY24 gross margin forecast of 18.6%.
For investors seeking a more comprehensive analysis, InvestingPro offers 20 additional tips on Tesla, providing deeper insights into the company's financial health and market position.
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