Morgan Stanley believes Tesla's Q4 EPS and revenue estimates will surpass analysts' predictions in the upcoming fourth-quarter earnings call. Thus far, Morgan Stanley has tried to remain impartial towards Tesla stock, holding both a bear and bull position. However, the investment bank and financial services company seem to be in favor of TSLA in the next earnings call.
In a note to its clients, Morgan Stanley wrote that the company expected Tesla to report a Q4 EPS of $0.88 on a GAAP basis. According to the compilations of analysts' estimates by Captial IQ, the common consensus is that the EV automaker will report a Q4 earnings per share of $0.84.
The investment bank and financial services company also predicted that Tesla would report a US$7.31 billion revenue in the next earnings call. Capital IQ stated that most analysts estimated Tesla's revenue to be US$7.05 billion.
Morgan Stanley maintained its positive outlook for Tesla in 2020. The investment bank stated in its note that the EV automaker could deliver up to 498,000 units in 2020. MT Newswire pointed out that Morgan Stanley's delivery estimates for 2020 were 36 percent higher year-over-year. The financial services company goes on further to say that Tesla could reach a full-year unit volume of 500k to 550k.
Morgan Stanley also accounted for Tesla's growing number of Gigafactories. It believes that the EV tech company will improve cost-efficiency in its factory in Fremont and ramp production in Gigafactory 3 in Shanghai, China. The investment bank expects Tesla to achieve its first full year of GAAP profitability, partly due to its GF3 ramp.
It also recognized the importance of Gigafactory 4 in Brandenburg. Morgan Stanley thinks that GF4 is essential for Tesla to maintain increasing sales volume in 2021.
Just a couple weeks ago, Morgan Stanley downgraded Tesla for the first time in seven years, reported Business Insider. The downgrade seemed to be in response to TSLA's 100 percent gain after rallying to trade at over US$500 per share.
Near-term momentum and sentiment around the stock is admittedly very strong, but we ultimately question the sustainability of the momentum," wrote Adam Jonas of Morgan Stanley wrote in a note.
Morgan Stanley's recent prediction seems to be a reversal on its position after the downgrade. Only time will tell whether the investment bank will maintain its positivity for TSLA.
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