Tesla Inc (TSLA)

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Deutsche Bank continues to see 'large downside risk' for Tesla (TSLA) in 2024
By: Investing | January 3, 2024

Deutsche Bank reiterated a Buy rating on Tesla (NASDAQ:TSLA) with a 12-month price target of $260.00 on the automotive stock following the electric vehicle maker’s 4Q volume report.

The company delivered 485k units in the 4Q, consisting of 462k Model 3 and Y, and 23k units of S/X and some Cybertrucks, enabling the company to hit its annual deliveries target of 1.8m units and clearing volume expectations for the quarter and year.

However, looking into 2024, Deutsche Bank analysts continue to see large downside risk to earnings expectations, due to a notably reduced volume forecast compared to market assumptions, pricing pressures, the potential impact of Cybertruck margins, and an elevated tax rate in China.

“We believe Tesla could initiate guidance for just 2.1m units of deliveries in 2024, and perhaps even move away from its long-standing goal for 50% volume CAGR over the mid-term.” Wrote analysts in a note.

Beyond 2024, investor focus is fixed on Tesla's next-generation platform. Although the launch timing and initial production capacity for this platform are currently uncertain, Elon Musk has indicated that the first vehicles using this advanced technology will be manufactured at Gigafactory Texas, followed by production in Mexico at a later stage.

Deutsche Bank has revised its 4Q EPS estimate to $0.74 from the previous $0.69, aligning it with the consensus estimate for the quarter. Consequently, the forecasted EPS for the FY23 now stands at $3.15, up from the previous estimate of $3.10.

Shares of TSLA are down 1.36% in pre-market trading Wednesday morning.

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