Tesla (TSLA) Gets Positive Outlook from Baird Ahead of Q1 Delivery Report

Image: @JayinShanghai/Twitter

Tesla gets a positive outlook from Baird ahead of the Q1 2023 delivery report. The firm reaffirmed its Overweight rating and $252 price target.

In Q1 2023, Tesla was able to prove that it is coping with current macroeconomic difficulties better than others. After the revision of negative estimates and worries about demand, the bearish sentiment eased some. This was helped by recent price cuts and as yet unconfirmed sales data showing a strong delivery performance this quarter.

“The year is still early, but we continue to like the setup of the stock and believe bias for estimate revisions is to the upside,” analysts Baird wrote.

The firm models ~403,000 deliveries in Q1, compared to a consensus estimate of 432,000. For example, analysts at Wedbush expect Tesla to do well and for deliveries in Q1 to reach around 420,000 vehicles. Baird estimates that downtime at Giga Shanghai associated with the Lunar New Year resulted in February and March production being about 14,000 vehicles fewer than the reported target run rate of about 80,000 vehicles. Overall, for 2023, Baird estimates approximately 1.7 million deliveries for Tesla, compared to a consensus estimate of 1.83 million. However, the firm's analysts believe production is on track to reach its target of 1.8 million.

Lithium is a key raw material for which Tesla has so far not seen a post-pandemic deflation. Baird analysts estimate that the recent decline in lithium prices, which have fallen about 20% from their all-time highs in January, could give the manufacturer an opportunity to cut prices or increase its industry-leading margins, putting pressure on competitors. The recent drop in lithium prices and other costs could boost margins in Q2, the firm believes.

© 2023, Eva Fox | Tesmanian. All rights reserved.

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Eva Fox holds zero shares of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.