Tesla slips after UBS downshifts to a Neutral rating on the EV stock
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Tesla (NASDAQ:TSLA) slipped in early trading on Monday after USB downgraded the electric vehicle stock to a Neutral rating after having it slotted at Buy.
Analyst Patrick Hummel and team think the recent strong share performance for the EV stock fully reflects the strong demand response for Tesla (TSLA) seen after the price cuts. The current share price is also seen as pricing in solid execution for TSLA in 2024. "We continue to see Tesla globally leading the race to affordable electric and autonomous mobility, but on a 1-year view, risk/reward looks balanced," noted Hummel.
Hummel and team pointed to a reassuring gross margin trend for TSLA, but also highlighted the worse-than-expected operating expenses and free cash flow. UBS set a price target of $270 on TLSA.
Tesla Q2 recap: The Austin-based company generated $2.4B in GAAP net income during the quarter and $2.7B in non-GAAP net income. Tesla (TSLA) delivered 466,140 electric vehicles in the second quarter and produced 479,700 vehicles. Last year, Tesla (TSLA) delivered 254,695 vehicles during Q2 and the Austin-based automaker delivered 422,875 vehicles in Q1 of this year. Operating margin came in at 9.6% of sales to fall from last quarter's mark of 11.4%. Reduced ASP due to mix and pricing was a drag on the margin line. Other factors impacting profitability were the cost of production ramp of 4680 cells, an increase in operating expenses driven by Cybertruck, AI and other large projects, and negative FX impact.
Shares of Tesla (TSLA) fell 1.02% premarket to $257.36 vs. the 52-week trading range of $101.81 to $314.67.
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