Tesla extends post-earnings rally as analysts rave about margins
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Tesla (NASDAQ:TSLA) pushed higher in early trading on Thursday after the company's Q1 earnings report impressed investors and analysts with the benefits of efficiency and scale shining through. In general, analysts raved about the electric vehicle maker's margins during the quarter, although there was still caution on valuation and potential bumps in the road.
Wedbush Securities (Outperform rating) called the results from Tesla (TSLA) stellar on both the top and bottom line. Analyst Dan Ives expressed confidence on the balance of the year as well. "We believe 1.5 million units of deliveries for the year is hittable and could be exceeded, however, it all rests on the China issues seeing no more shutdowns from this point and Berlin and Austin ramping according to plan," he noted.
Bank of America (Neutral rating) said that on an operating basis, revenue came in slightly ahead of estimates, which was further enhanced by stronger grosses, better operating performance, and higher regulatory credits to drive the operating beat. "Free cash flow was also a positive surprise in the quarter," according to analyst John Murphy. BofA still has the view that TSLA stock may already be priced for perfection despite the strong numbers.
Evercore ISI (In Line rating) pointed to another stellar margin quarter. "Even if the Covid & raw mat headwinds plaguing the entire Auto industry will starkly impact TSLAâs Q2 (Shanghai reopening after 4-week shutdown; Q2 units likely down 10% sequential), TSLAâs 12-year âstartupâ experience and EV maturity/scale are now shining through," noted analyst Chris McNally. His key takeaway was that the clean Q1 Auto gross margin of +30% essentially proves TSLA can be a 20% sustainable EBIT margin company at higher volumes.
Wells Fargo (Equal Weight rating) thought that Q1 results showed the pricing actions are currently more than offsetting the rising raw material costs, but the firm kept a cautious stance on the stock due to valuation, the risk of increased regulatory scrutiny, and high long-term volume targets. The firm is also cautious on the risk of regulation with Autopilot and FSD.
Elsewhere on Wall Street, bullish-leaning RBC Capital Markets hiked its price target on Tesla (TSLA) to $1,175 from $1,035 and bearish-leaning Citi upped its PT to $375.
Shares of Tesla (TSLA) rose 7.20% premarket to $1,047.51 in premarket trading.
Dig into the Tesla earnings call transcript.