Tesla, Ford EPS targets raised in Citi's reassessment of auto sector
alvarez

Citing the confident tone struck by executives in recent earnings calls, Citi analyst Itay Michaeli hiked earnings estimates for multiple auto industry stocks into the second half of 2022.
He explained that the guidance confirmations and commentary on resilient US auto demand were expected. However, the bullishness on Europe despite significant macroeconomic pressure on the region and general confidence voiced by management on the current quarterâs trajectory and the gradual alleviation of supply chain issues necessitated a revisit of price targets was a surprise, Michaeli said. He expects this optimism could flow through to investor sentiment and continue to buoy the sector toward outperformance relative to the broader market for the full year.
After factoring in these upside expectations and raising EPS estimates into the year end, price targets were raised on Ford (NYSE:F), Tesla (NASDAQ:TSLA), and Visteon (NASDAQ:VC). On the EPS front, Ford Motor's (F) 2022 EPS estimates were raised from $1.98 to $2.02, while full-year EPS estimates for Magna International were raised to $5.00 from a prior $4.92, Tesla (TSLA) from $14.06 to $14.66, Visteon Corp (VC) from $4.07 to $4.90.
Price target changes resulting from those EPS adjustments were as follows:

Ford: Neutral-rated, $15 â $16
Tesla: Sell-rated, $375 â $424
Visteon: Neutral-rated, $115 â $128

Despite the price target hikes and optimism on the auto cycle, each of the names reassessed was rated either Neutral or Sell, aside from Canadian parts manufacturer Magna International (MGA). 
âWhile the positive tone thus far has been encouraging and consistent with our own US views, we are mindful of the risk that Autos could end up being perceived as vulnerable to guide-downs upon the next potential round of negative macro news,â he explained. âAs such, we continue to prefer NA exposure and/or names for which 2022 estimates (and the 2023 bridge) seem to us reasonable/beatable and where secular growth can outweigh macro.â
In particular, a âSellâ rating was maintained on Tesla (TSLA) as Michaeli surmised the bull case expectations are âtoo aggressive.â
âWe are constructive on Teslaâs strong EV position and particularly the companyâs improved execution in recent years,â Michaeli acknowledged. âHowever, we are more skeptical on the companyâs FSD/AV [Full Self Driving/Autonomous Vehicle] approach, which we view as a critical input to the overall risk/reward assessment given our positive stance on the AV opportunity as a whole.â
Read more on Fordâs latest product releases.