Concerned about the impact of price cuts on car gross profit, Goldman Sachs lowered Tesla's price target to $275

Futu News ·  09/18 22:46

Tesla lowered its earnings per share forecast

$Tesla(TSLA.US)$The pricing of the Model S/X was drastically reduced by 15-19% on September 1, and the pricing of the Model Y in China was lowered in mid-August. Although Tesla has raised the pricing of the Model 3, its updated version is currently being sold in Europe and China. Goldman Sachs has reassessed Tesla's earnings per share forecasts for 2023 and 2024. Considering the low average selling price, the gross margin of automobiles declined accordingly. Goldman Sachs slightly lowered its 2023/2024 earnings per share forecast from $3.00/4.25 to $2.90/4.15.

Maintain neutrality and target price of $275

Furthermore, despite an increase in Tesla's regional sales data for July and August, Goldman Sachs chose to lower its sales forecast for the third quarter of 2023 to 460,000 vehicles. The reason for this adjustment is Goldman Sachs's assessment of the reduced demand for Model S/X models and the impact of the Model 3 update. Goldman Sachs analyst Mark Delaney wrote in a report, “We think Tesla may lower prices further in 2024 to support higher sales volume, but cost cuts will also have a declining impact on earnings per share.” , and maintains a neutral rating and a target price of $275.

Goldman Sachs surveys car demand

Given investors' continued focus on the broader economic context and demand for electric vehicles, Goldman Sachs has analyzed the latest indicators relating to automotive demand. The survey results showed year-over-year sales growth in all three regions. Since the beginning of the year, sales in the US have increased 14% compared to the previous year, and in August there was a 17% year-on-year increase. Meanwhile, sales in Europe increased 18% this year, and sales in key regions increased 25% year over year in August. Sales in China increased 2% year over year, including 3% year over year in August.

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