Tesla could cut prices this year to keep its market share - Daiwa
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Daiwa Capital Markets drops its price target on Tesla (NASDAQ:TSLA) to $980 from $1,150 as it warns that a slower ramp-up at the Berlin and Austin factories than anticipated due to chip availability could pose risk to near-term expectations. Analyst Nathan also raises some concerns on the overall level of pricing this year.
"A weaker product cycle compared to competition in 2022-23 and a significant cost gap could drive Tesla to cut prices to maintain its market position. This is especially true if EV subsidies are not enhanced to include Teslaâs vehicles." writes Nathan.
Looking at the EPS line, Nathan says incremental volumes from Austin and Berlin plants might lag higher costs as those factories come online, which could hurt margins in 2022. Higher costs of battery materials are also seen adding additional pressure. Daiwa does not assume any significant benefits from operating leverage and keeps its 2022 EPS forecast at $10 vs the consensus estimate of $10.42.
Daiwa sticks with a Neutral rating on TSLA. The overall analyst rating scorecard on TSLA shows 15 Buy-equivalent ratings or higher, 12 Neutral-equivalent ratings and 8 Sell-equivalent ratings.
Shares of Tesla (TSLA) are up 0.65% premarket to $942.81 following yesterday's +10% pop. The EV stock is still below its 50-day and 100-day moving averages.