Goldman Sachs raises Tesla (NASDAQ: TSLA) EPS and Volume Estimates due to the company's ability to navigate the supply chain and Giga Berlin's recent approval. At the same time, it cuts Ford’s and General Motors' price targets due to their higher production costs and slightly more complex supply dynamics.
Goldman Sachs analyst Mark Delaney revised US automaker surveys to lower industry forecasts and reflect additional supply chain problems that have emerged amid Russia's attack on Ukraine. As a result of the valuation, the analyst noted that rising production costs contributed to lower estimates and lower target prices for General Motors and Ford Motor.
While Goldman Sachs still expects vehicle sales to increase in the second half of 2022 and further into 2023, they believe there is a wide range of potential outcomes related to the war in Ukraine and its impact on the supply chain. The firm remains of the view that stocks of companies that can navigate the current operating environment and capitalize on key growth opportunities such as electric vehicles, autonomy, and data centers will perform better, Delaney wrote in the note to clients.
The new price target for Ford is $20 per share, down from the previous $22. For the same reasons, the analyst cut GM's target price to $65 per share from $72 per share.
"We reduce our EPS estimates for F and GM in 2022 (Ford by 9% and GM by 2%, with GM's exit from Europe reducing the impact vs. Ford), but we assume that higher costs and a slightly more difficult to supply dynamic is mostly offset by better pricing given low vehicle inventory (both companies have done well this cycle to mitigate cost pressures with pricing)."
Delaney does not have a positive outlook for Ford and GM, and he stressed that Tesla has a number of advantages over other automakers. The analyst raised his EPS estimates to reflect higher EV prices and slightly higher volume. Delaney pointed out that the higher volume is a result of Tesla's ability to navigate the supply chain. In addition, this is directly influenced by the approval of Giga Berlin and the start of its work. A separate factor was the potentially higher demand for electric vehicles after the recent rise in oil prices.
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