By Michael Elkins
Wedbush reiterated an Outperform rating and $225.00 price target on Tesla (NASDAQ:TSLA) ahead of the electric automaker’s 1Q delivery report. Tesla will be reporting its 1Q delivery units number likely this weekend with all eyes on how demand is holding up in a shaky macro.
Analysts wrote in a note, “Clearly since the Model Y/3 price cuts were implemented early this year demand has been robust during the course of 1Q led by the key China region, which should enable Tesla to at least hit the ~420k bogey for the quarter with possible upside depending on logistics around deliveries this week. That said, the macro remains uncertain and we would not be surprised to see more slight price cuts around the edges both in the US and China over the coming months for Tesla to further stimulate consumer demand.”
Wedbush estimates that Tesla will report 402k Model Y/3 and 18k Model S/X deliveries this quarter with the mix likely skewed on the upside for Model Y post price cuts in China and U.S. Analysts believe that given the scale and scope of Tesla's production capacity, margins will not be sacrificed at the expense of volumes in 1Q with Auto GM that should be able to meet expectations.
“While the delivery bogey is now 1.8 million units globally for Tesla in 2023 it appears the trajectory so far is trending slightly above that level out of the gates in 1Q based on China and US demand post price cuts,” wrote analysts. “The macro remains uncertain and a recession could likely be on the doorstep, however Tesla is now positioned well with its price points with demand outstripping supply so far in 2023.”
Shares of TSLA are up 1.70% in pre-market trading on Wednesday.