Electric vehicle manufacturer Tesla Inc. is set to release delivery numbers for Q2 soon, and analysts are optimistic about growth driven by China. Deutsche Bank’s Emmanuel Rosner increased his delivery predictions for the quarter from 438,000 to 448,000, with his new figures indicating a 6% sequential growth and 76% growth from the previous year, beating FactSet’s consensus estimate of 445,000.
Rosner attributes this revised expectation to “sequential volume growth post the pricing actions the company has taken thus far this year, with China coming in particularly strong”. He added that Tesla has registered close to 130,000 units quarter-to-date by mid-June, with registrations totalling 40.6k in China for the first half of June alone. Rosner believes this trend can lead to an uptick in deliveries in China, despite minor price increases on Model 3 and Model Y cars in May.
The analyst uplifted the share price target on Tesla to $260 from $230 and retained a ‘buy’ rating for the company.
Tesla Sales Outlook Strong in Europe and North America
Tesla’s sales outlook remains strong as the company registers 43,600 new vehicles in Europe and prepares to deliver the remaining half of its European vehicle deliveries in the last month of the quarter. Additionally, analysts foresee solid Model Y deliveries in North America despite a likely sequential volume decline for the Model 3.
These positive sales trends have contributed to an increase in Tesla’s second-quarter revenue projection to $24.0 billion, up from $23.5 billion. Analyst Alex Rosner also updated his sequential gross margin growth expectations, excluding credit, to negative 140 basis points from negative 200 basis points. He projects a slightly lower sequential decline in average selling prices due to a couple of small price hikes, contributing to Tesla’s healthy financial outlook.
However, despite these positive sales trends, Goldman Sachs analyst Mark Delaney downgraded Tesla’s stock due to concerns about the selling environment for new cars. The stock fell approximately 1% in Monday trading, but remains up 31% over the past month and 105% on the year.
Overall, Tesla’s positive sales trends and healthy financial projections point to a strong future for the company, despite potential market challenges.
Related: Tesla Stock Drops Again After Goldman Sachs Downgrades
