A top Wall Street analyst is warning investors that electric vehicle maker Tesla (TSLA) is unlikely to meet or surpass its fourth-quarter delivery targets.
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Pierre Ferragu, a five-star-rated analyst with a 66% success rate at New Street Research, says investors should prepare for the fact that Tesla will fall short of market expectations for fourth-quarter vehicle deliveries when it reports the numbers on Jan. 2.
Ferragu says Tesla continues to struggle with a post-subsidy demand hangover in the U.S. and weak sales in the rest of the world. As such, New Street Research expects Tesla to deliver between 415,000 and 435,000 vehicles for this year’s fourth quarter. That’s below Wall Street’s consensus estimate of 440,000 vehicle deliveries.
Weakness for Tesla in the U.S. Market
Ferragu said Tesla’s sales in the U.S. are still recovering from the “pull-forwards of 3Q” as U.S. subsidies on electric vehicles expired at the end of September. The U.S. market remains the main source of sales weakness for Tesla, adds the analyst.
New Street expects U.S. deliveries to fall by about 75,000 units quarter-over-quarter as subsidy-driven strength seen earlier in the year evaporates. Lower delivery volumes are expected to continue pressuring Tesla’s profitability. New Street projects Tesla’s gross margins will decline by 2.3 percentage points quarter-over-quarter, putting margins about 2.2 points below consensus forecasts.
Is TSLA Stock a Buy?
The stock of Tesla has a consensus Hold rating among 32 Wall Street analysts. That rating is based on 11 Buy, 12 Hold, and nine Sell recommendations issued in the last three months. The average TSLA price target of $382.87 implies 20.97% downside from current levels.
