The words Tesla (TSLA) and EVs are synonymous these days, but Jefferies analyst Philippe Houchois thinks it’s time the conversation moved on from here; it should no longer revolve around the opportunity EVs represent – it’s already common knowledge these will replace ICE cars over the next several years. In turn, the talk should center on “how much global share Tesla will gain this year and through 2023.”
As such, when the company reports 4Q21 earnings next Thursday (Jan 26), Houchois thinks the results will be “critical to validate (or not) the Q3 profit dynamics that could see Tesla 1) carve out meaningful share from legacy OEMs busy protecting their own share by ramping up BEVs and 2) claim a disproportionate share of the industry profit pool.”
It is known by now, Tesla is seeing strong demand for its offerings, but to meet consumers’ appetite and claim a bigger slice of the EV cake, it will have to expand capacity. That should be taken care of this year.
Houchois expects the Austin and Berlin plants to start producing “deliverable” Model Ys in February and in April respectively, with the added capacity provided by the facilities helping to “lower the volatility” of deliveries in Europe and in China. Concerning the latter, ahead of “eliminating purchase incentives (2023E),” the company will also be able to take advantage of growing demand for BEVs in the region.
The earnings call should also provide an update on the state of the Cybertruck, currently subject to rumors of delays. In any case, while not great for optics, Houchois does not consider a delay much of a big deal volume wise in 2022. “More critical in our view,” said the analyst, “Will be the roadmap to a smaller Tesla which, if confirmed, will underpin the drive to affordability.”
As most sales are made online, we could glean further insight by looking at the monthly users trends. Unique Visitors (UVs) increased by 9% between Q3 and Q4, growing from 45.5 million to 49.6 million, while increasing by a more modest 5% from UVs in the same period last year.
Based on the above, Houchois rates Tesla shares a Buy along with a $1,400 price target. If met, the figure could yield returns of ~35% over the one-year timeframe. (To watch Houchois’s track record, click here)
Houchois’ expectations are on the bullish end of the scale; the Street’s $1,057.39 average target implies shares will remain rangebound for the foreseeable future. All told, Tesla’s Moderate Buy consensus rating is based on a split of 16 Buys, 9 Holds and 6 Sells. (See Tesla stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.