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Here’s Goldman’s ‘most important lesson’ from Musk’s earnings call


Goldman Sachs sees an electrification move in Tesla shares (TSLA) in the next twelve months.

Analyst Mark Delaney, who maintains a Buy rating and $200 price target for the stock, reiterated his view in a note following Tesla’s earnings report on Wednesday. The hypothetical price target is about a 25% increase from the stock’s current level.

“Given the focus of investors on Tesla’s delivery volume in particular (and the importance of volume to its vertically integrated model and the long-term cost benefits of factories), newer at scale),” Delaney wrote, “we found order strength to be the most important takeaway from the call.”

A truck carrying Tesla cars leaves the Tesla factory on Tuesday, May 12, 2020, in Fremont, California.  Tesla CEO Elon Musk has emerged as a champion in defying stay-at-home orders to prevent the spread of coronavirus, while also gaining the same support as critics on the vehicle. social media.  Among the supporters is President Donald Trump, who on Tuesday tweeted that Tesla's factory in the San Francisco Bay Area should be allowed to stay open despite the health department's order to close except for basic operations. .  (AP Photo/Ben Margot)

A truck carrying Tesla cars leaves the Tesla factory on Tuesday, May 12, 2020, in Fremont, California (AP Photo / Ben Margot)

Price hike note for Tesla comes after the company reports mixed fourth-quarter and full-year outlook.

Tesla’s fourth-quarter gross margin came in at 23.8%, below estimates of 25.4%. Automotive gross margin came in at 25.9%, compared with analyst estimates of 28.4%.

On an earnings call with investors, Tesla CEO Elon Musk did his best to sound enthusiastic about Tesla’s business.

You too address needs concerns, stating: “So far in January, we’ve seen the strongest orders ever in our history.” However, he also warned of a “severe” recession this year.

The economic warning appears to have been incorporated into Tesla’s 2023 output growth guidance of 38%, well below its long-term target of 50%.

Musk also announced that Cybertruck production will be delayed until the summer, with “volume production” starting in 2024.

Despite the uncertainties, Tesla stock up nearly 11% on Thursday as investors backed Musk’s comments on short-term demand trends.

“We continue to believe that the company is well positioned for long-term growth given its leadership position, both in terms of cost structure and as a clean mobility full solution provider,” said Delaney. “.

However, weaker aspects from the earnings call have led others on Wall Street to take a more cautious view of the stock.

For example, Guggenheim analyst Ronald Jewishikow maintains a Sell rating on Tesla stock.

“We’re a bit surprised to see the stock rebound from the market with potentially significant negative adjustments to EPS and gross margin for fiscal year 23/24,” Jewishikow wrote in a note. customer intention. “We continue to believe that a price recapture on 3/Y will be challenging and lengthy and as such, investors need to recalibrate valuations for a growth algorithm that resets within a few days. next year.”

Brian Sozzi is an editor-in-chief and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and more LinkedIn.

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