On Wednesday, Tesla (NASDAQ: TSLA) will publish its earnings report for Q2 2022, which will reflect its work for the three months of the quarter. Analysts are already prepared and do not expect any unpleasant surprises.
Deutsche Bank has added Tesla to its short-term Catalyst Call Buy List. The company is expected to beat low margin expectations in the second quarter driven by good cost execution and continued pricing strength. In addition, the manufacturer is expected to confirm its full-year supply guidance for 50% growth, which would mean strong volume growth in the second half of the year.
“We believe the Street's anticipated sequential profit deterioration of >$1.5B more than captures the large headwinds faced in the quarter, from Covid-related shutdowns in China, costs associated with closed-loop productions, and ramps in Texas and Berlin factories.”
While Tesla's share price has fallen 30% since the start of the year, this is largely reflected by supply issues. However, this is now rapidly improving, providing investors with an excellent opportunity to accumulate stocks.
Barclays also expects Tesla's earnings to exceed current expectations. Analyst Brian Johnson sees modest second-quarter earnings-per-share compared to consensus, but believes free cash flow could have been more emphasized given CEO Elon Musk's comments last month that Giga Berlin and Giga Texas are giant money furnaces.
Wedbush analyst Dan Ives wrote in a note to clients on Monday that Tesla's ability to maintain profits this quarter will be “front and center” for investors, but all focus is now shifting to the outlook for the rest of the year:
“With deliveries soft this quarter due to the China shutdown, Tesla's ability to preserve margins this quarter will be front and center for investors while all focus now shifts to the outlook for the rest of the year.”
Ives also notes that, “while Giga Berlin and Austin factories are in significant ramp mode, this is a significant production capacity expansion for 2023 and beyond.”
Despite looming recession fears and increased competition, the analyst is confident that Tesla has no problem. Based on worldwide Model Y orders, he believes demand for Tesla cars still outstrips supply by about 15-20%.
Estimates: Analysts expect Tesla to earn $1.81 a share, a 25% increase from the year-ago period. Projections call for sales to rise 38% year over year to $16.521 billion.
© 2022, Eva Fox | Tesmanian. All rights reserved.
We appreciate your readership! Please share your thoughts in the comment section below.
Legal Disclaimer --
This article is for informational purposes only. You should not construe any such information or other material as an investment, financial, or other advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by Eva Fox, Tesmanian, or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.
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.