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There was mixed reaction to the Tesla (NASDAQ:TSLA) earnings report on Wall Street as the strong growth and record quarterly profit dazzled some analysts, while others focused on the stressed margin rates, free cash flow pressures, and valuation.
Morgan Stanley analyst Adam Jonas said the modest miss was largely anticipated with price cuts in China and higher raw material costs. The softer-than-anticipated free cash flow number was said to be tied to $2.2B of working capital usage. The firm reiterated its Overweight rating and $200 price target on Tesla (TSLA). The EV stock is also Morgan Stanley’s top pick in the auto sector.
Wedbush Securities raised its price target to $200 from $175 on Outperform-rated Tesla (TSLA). “While in the near-term Tesla is sacrificing margins for higher volumes, we view this as the right strategic poker move to put an iron fence around its customer base and fend off growing EV competition coming from Detroit, Europe, and China,” noted analyst Dan Ives.
Elsewhere, Wolfe Research hiked its price target on Tesla (TSLA) to $185 as it become more bullish on the setup for 2023. Citi boosted its price target to $146 from $137. Bank of America increased its price target to $155 from $130 on its view that the EV stock is fairly priced. “The company’s self-funding status and ongoing access to relatively low-cost capital should help support future growth,” updated analyst John Murphy.
Wells Fargo sounded a little more bearish on the Tesla print. Analyst Colin Langan and team said the were surprised shares are trading up post market following Q4 results. “Investors are excited by conservative delivery guidance and >20% margin guidance. However, we are skeptical of margin targets. Also, IRA savings fell short of our expectation,” he warned.
Bernstein said it was torn about the Tesla (TSLA) earnings report, but in the end was kept in the bearish camp due to valuation concerns.
On Seeking Alpha, Leon Laake wrote about the long-term upside and Bill Maurer dug into why the TSLA numbers were rather lackluster.
Shares of Tesla (TSLA) shot up 6.65% in premarket trading to $154.00.
Dig into the Tesla earnings call transcript.
