Tesla stock gains as analysts applaud earnings results
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Tesla (NASDAQ:TSLA) shares gained sharply on Thursday as much of Wall Street took a more optimistic view of the noisy earnings report.
Shares of the Austin-based automaker rose 5.91% after the market open, building on a rebound from late-May lows that left the stock nearly 50% below its January peak. The clear move upward bucked the immediate post-earnings uncertainty on juxtaposed profit and margin figures that caused volatile moves for the stock in Thursdayâs extended session.
According to Wall Street assessments of the quarter, the positive action for shares is appropriate in light of the results.
âWhile Automotive GM (ex credits) of 26.2% missed the Street by 200 bps this number was better than the lowered whisper numbers, which along with relatively impressive bottom-line metrics were something for the bulls to hang their hat on in an otherwise very choppy quarter given the China shutdowns,â Wedbush analyst Dan Ives told clients on Thursday. 
He added that while factory shutdowns in China cut into delivery figures, trends seem to be picking up sharply from June onward. The reiteration of delivery guidance for the full year was a key factor in the earnings results for Ives, prompting him to reiterate his $1000 price target and âBuyâ rating for shares. Though, it is worth noting he suspects execution must be flawless to hit this ambitious aim.
âIn a nutshell, the quarter was better than feared with healthy guidance for 2H by Musk & Co. that look achievable with no margin for error,â he concluded. âAny speed bump in 2H around China will take the 50% growth number off the table which will be the big debate in the stock over the coming months starting this morning.â
Mizuho analyst Vijay Rakesh echoed the optimism on the better than feared print. In a note to clients on Thursday, he not only reiterated his âBuyâ rating on shares, but raised his price target to $1175 from a prior $1150. 
He explained that a continued production ramp, profitability improvements, and better execution sans production shutdowns should support shares moving forward. 
âWe see TSLA continuing to be a leader in the EV market with improving battery technology and strong ADAS/AD roadmap and an emerging player in energy storage,â Rakesh wrote, forecasting deliveries of over 2M vehicles in 2023.
The projection of increased auto production was called out by Hargreaves Lansdown analyst Laura Hoy as a key to lowering costs and counteracting the âembarrassingâ price increases and margin compression called out by CEO Elon Musk on Wednesday.
âThe more cars that rattle through Teslaâs enormous gigafactories the lower the per-unit costs, so the disappointing delivery numbers released earlier this month meant investors had already braced themselves for a step down in profitability,â she wrote. âOn the bright side, this should be a short-term problem. As we saw in the first quarter, fully functioning factories send dollars straight to the bottom line. Once supply chain bottlenecks ease and the factories are humming along at full capacity, margins will get a boost.â
Finally, Bank of America analyst John Murphy also raised his price target on the stock after the earnings result came in above his expectations. In a note reviewing the results, he hiked his price target to $950 from a prior $900. However, Murphy remained far more cautious than his peers by signing a âNeutralâ rating to the stock and advising caution on the companyâs ability to outperform in the current market environment.
âWe continue to believe that TSLA stock is predicated on a growth valuation framework, for which access to low-cost capital is a key input,â Murphy wrote. âDespite the relatively good 2Q performance, we have trepidation that TSLA stock may already be priced for perfection (or at least priced for hyperbolic growth), such that near-term earnings beats may be insufficient to get bulls incrementally positive.â
He added that commentary on the cash-burning Austin and Berlin factories remained vague, adding uncertainty as to the extent each will weigh on shares moving forward. Also, Cybertruck production and the model Y ramp are catalysts likely pushed out into 2023.
Read more on Teslaâs production targets for the remainder of the year.