‘Greater range of delivery outcomes’ this quarter, Citi analysts say
Analysts at Citi on Thursday dialed down their expectations for Tesla Inc.’s third-quarter deliveries and profit, saying they based their new numbers on China sales, global registration data and an implied production pace for the EV maker.
Tesla TSLA, +2.44% and General Motors Co. GM, +2.50% are scheduled to report third-quarter vehicle sales next week, while Ford Motor Co. F, +1.37% and a few others are slated to report September sales.
Earlier this week, a Deutsche Bank analyst warned that there was “meaningful downside risk” to current 2024 Tesla projections due to limited volume growth, and cut his price target on Tesla stock.
J.D. Power on Thursday estimated another double-digit gain for U.S. new-car sales in September. GM, Ford and Stellantis NV STLA, +2.45% are facing a strike affecting some of its assembly plants and, in the case of GM and Stellantis, auto-parts distribution centers.
The Citi analysts, led by Itay Michaeli, said they trimmed their Tesla quarterly sales estimates to 450,000 vehicles, from a previous expectation of 468,500 vehicles.
They lowered their forecast for adjusted per-share earnings to 75 cents in the quarter, from a prior estimate of an adjusted EPS of 81 cents for the quarter.
The Citi’s expectations compare with FactSet consensus of Tesla deliveries of 462,000 vehicles in the quarter, and consensus around an adjusted EPS of 79 cents for the quarter.
“We will revisit our model post the [third-quarter] delivery report,” the Citi analysts said. They kept the equivalent of a hold rating on the stock.
The update on the sales estimates was based on recent weekly China data “in part reflecting the Model 3 refresh transition,” as the compact sedan in some parts of the world is getting a minor update; the latest available global Tesla registration data; and their observations on production rate and “inventory discounting, with our estimates assuming some [quarter-on-quarter] de-stocking,” the analysts said.
Given Tesla’s production pace and the Model 3 changes, “we see a greater range of delivery outcomes vs. typical quarters,” they said.
Tesla shares have doubled so far this year, compared with gains of around 12% for the S&P 500 index SPX.