On Thursday, TD Cowen maintained its Hold rating on Tesla (NASDAQ:TSLA) with a consistent price target of $180.00. The assessment follows Tesla's third-quarter earnings per share (EPS) outperformance, which was bolstered by Full Self-Driving (FSD) revenue and a record low cost of goods sold (COGS) per vehicle. This combination led to a non-GAAP automotive gross margin (GM) of 17.1%.
Tesla's management has projected deliveries that surpass market expectations for the fourth quarter of 2024 and the full year of 2025. However, the company anticipates that the automotive gross margin will not remain at the same level in the fourth quarter of 2024 due to increased discount activity.
The electric vehicle maker has also indicated that there are no current plans to develop a $25,000 non-autonomous electric vehicle. Additionally, Tesla pointed out regulatory challenges associated with the deployment of unsupervised Full Self-Driving technology, with specific difficulties highlighted in California.
These projections and updates were part of the commentary provided by the TD Cowen analyst in relation to Tesla's recent financial performance and future outlook. Despite the positive note on earnings and delivery guidance, the Hold rating suggests a cautious stance on the stock's near-term growth prospects.
In other recent news, Tesla has been making significant strides in its financial performance and operational developments. Truist Securities, Jefferies, and Cantor Fitzgerald have all updated their outlook on Tesla shares. Truist raised Tesla's price target to $238 from $236 due to the company's improved gross margins and earnings per share in the third quarter.
Similarly, Jefferies increased Tesla's price target to $195 from $165, predicting third-quarter revenues of $19.9 billion, an automotive gross margin of 14.5%, and earnings before interest and taxes of $1.98 billion. Cantor Fitzgerald also adjusted its stance on Tesla, raising the electric vehicle maker's price target to $255 from $245, reflecting Tesla's higher gross margins and reduced operating expenses.
Tesla's third quarter was marked by 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. Tesla's Q3 operating cash flows reached $6.3 billion, with energy margins over 30%.
InvestingPro Insights
To complement TD Cowen's analysis, InvestingPro data offers additional context on Tesla's financial position. The company's market capitalization stands at $682.53 billion, reflecting its significant presence in the automotive industry. Tesla's P/E ratio of 54.8 indicates that investors are pricing in high growth expectations, aligning with the company's ambitious delivery projections for 2024 and 2025.
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 suggest a strong financial foundation, which could support the company's growth initiatives and help navigate potential challenges in maintaining gross margins, as mentioned in the earnings call.
However, it's worth noting that Tesla "suffers from weak gross profit margins," with the latest data showing a gross profit margin of 17.72%. This aligns with the company's warning about potential margin pressure in Q4 2024 due to increased discounts.
For investors seeking a more comprehensive analysis, InvestingPro offers 21 additional tips for Tesla, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.