On Monday, Goldman Sachs adjusted its outlook on Tesla Inc (NASDAQ:TSLA), reducing the electric vehicle manufacturer's price target to $190 from the previous $220, while retaining a Neutral stance on the stock. The revision reflects concerns over production challenges and market conditions that could impact Tesla's performance.
The firm cited several factors for the adjustment, including the pace of the Model 3 production ramp-up and operational downtime at the Berlin factory due to the Red Sea conflict and associated power loss.
Additionally, delivery estimates in key regions for the first two months of the quarter, as reported by third parties like the China Passenger Car Association (CPCA) and Motor Intelligence, indicate a mixed picture with year-over-year increases in high single digits and a low double-digit decrease quarter-over-quarter.
Goldman Sachs has revised its delivery estimates, now expecting Tesla to deliver 435,000 vehicles in the first quarter, down from the prior estimate of 475,000. The forecast for total vehicle deliveries in 2024 has also been reduced to 1.98 million, a 9.5% increase year-over-year, from the previous expectation of 2.08 million.
The firm's analysis includes preliminary data, such as a sequential decline in Tesla app downloads in the United States and Europe when comparing the first two months of the first quarter of 2024 to the fourth quarter of 2023. Year-to-date downloads are also reportedly lower compared to the same period last year, according to Sensor Tower data. Furthermore, exports from Tesla's China factory have seen a year-over-year decline for January and February combined.
Goldman Sachs' revised 12-month price target of $190 is based on a 50 times multiple applied to the updated earnings per share (EPS) estimates, which include stock-based compensation (SBC). The firm also outlined potential scenarios for Tesla's stock, suggesting an upside of around $300 using a 50-60 times multiple applied to the projected 2026 EPS, and a downside in the range of approximately $65-$85 using a roughly 30 times multiple applied to the 2024 EPS estimates.
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