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Tesla is stuck in neutral, this analyst says

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Following the company’s second quarter results, Roth MKM analyst Craig Irwin remains on the sidelines with regards to Tesla (Tesla Stock Quote, Chart, News, Analysts, Financials NASDAQ:TSLA).

On July 23, TSLA reported its Q2, 2024 results. The company posted Adjusted EPS of $0.52 on revenue of $25.5-billion.

The analyst says this quarter missed his estimates on the bottom line.

“Tesla’s missed adj-EPS consensus by ($0.10) and adj-auto gross margins by (200 bps). This likely refocuses investors on sustained headwinds from vehicle discounting necessary to drive volumes, and price pressure likely continues through year-end,” he wrote. “Nothing new on AI and punt of the CyberCab launch event to 10/10 also likely dampens investor enthusiasm. Mgmt is holding on to the dream of unsupervised ADAS for a RoboTaxi, but regulatory approvals and tech readiness have this at least a few years away, in our view.”

In a research update to clients July 24, Irwin maintained his “Neutral” rating and price target of $85.00 on TSLA.

The analyst thinks the company will post EPS of $2.07 on revenue of $96.4-billion in fiscal 2024. In fiscal 2025, he sees EPS of $2.45 on revenue of $105.0-billion.

“We reiterate our $85 target using a 35x P/EPS multiple on 2025E adjEPS of $2.45.,” Irwin added. “Our Neutral rating deviates from the ROTH MKM standard rating system, and we believe the Neutral rating appropriately balances how Tesla is positioned to continue executing reasonably well, but the shares are valued at an oversized premium to all peers, in our view. The market valuation appears to rest on the assumption that competing EVs slated for launch by YE25 will all be flops. BYD (BYDDY-NC) has surpassed Tesla in global EV sales, which shows Tesla does not operate in a vacuum.”

About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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