Tesla (TSLA) stock surged more than 9.99% Thursday, as the electric-vehicles giant reported better-than-expected fourth-quarter net income and earnings per share of $1.19. Despite the gains, investors were encouraged by the company’s outlook for the future. Wall Street responded positively to the news, with the S&P 500 and Nasdaq Composite indexes rising 0.8% and 1.3%, respectively. Analysts at Baird noted that “demand [for Tesla’s products] has been the biggest question entering 2023 after recent price cuts and fear of a macro slowdown, but [the company’s] demand remains strong and outpacing production capacity.”
Tesla plans to produce approximately 1.8 million vehicles in 2023, an increase from the 1.37 million in 2022. This forecasted growth eased investors’ worries, as the stock had been declining 34% in the preceding three months. Analysts at Kallo and Mizuho rated Tesla shares as a ‘Buy’, with respective price targets of $252 and $250 a share. Rakesh noted that although prices were decreasing, Tesla was able to cushion the margin impact with cost offsets such as improved utilization at two new plants, and falling raw material costs.
Cowen analyst Jeffery Osborne rates Tesla’s shares Hold, increasing his price target to $140 from $122 after the company’s fourth quarter earnings. Despite concerns over vehicle prices and their impact on margins, Osborne noted the energy storage business is performing better than expected, citing the deployed 2.5 gigawatt hours of battery storage capacity up 152% year over year. Wedbush’s Dan Ives characterized the results as “solid” and maintained a Buy rating, increasing his price target to $200 from $175. He noted the demand commentary was “what bulls wanted to hear” and declared “the bears (for now) will go back into hibernation mode.” Investors will be watching closely for Tesla’s upcoming March 1 event, which is expected to introduce a lower-priced vehicle to expand the company’s addressable market.
Approximately 64% of analysts assessing Tesla stock recommend a Buy, being the highest Buy-rating ratio in the company’s record according to FactSet. Comparatively, the average Buy-rating ratio for stocks in the S&P 500 is around 58%. The average analyst price target is estimated to be $206 per share.
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