Tesla in the second semester 2021. What to expect

In a note to clients, Goldman Sachs analyst Mark Delaney, who has a buy rating on the stock, said that the record profit despite supply-chain issues demonstrated the company’s ability to continue expanding earnings.

“We maintain our Buy rating on the stock, and we believe that Tesla’s strong automotive gross margin this quarter, despite multiple headwinds, as well as the company’s plan to materially increase capacity, are positive signs for Tesla’s forward earnings potential,” according to the note. “We also believe that Tesla’s leadership in EVs (and its full ecosystem for clean transportation, which includes a charging network, solar, and storage) and automotive technology positions it well in the long run.”

Delaney also raised his price target for the stock from $860 to $875. Several other analysts made minor adjustments to their price targets as well.

Following the beat, the stock rose modestly by Tesla standards. In premarket trading on Tuesday, shares were up 2.2 percent.

Barclays analyst Brian Johnson, who rates the stock as underweight, wrote in a note that the beat appeared “relatively clean,” but that the lack of clarity around timelines for new factories in Texas and Germany raised growth concerns.

“The stock failed to deliver on the beat in after-hours trading. While value investors may value the quarter, they are unlikely to be the type of investors willing to pay more than $500 billion for a carmaker; rather, it is growth investors, who have seen many of their hopes dashed, who have supported TSLA’s valuation and may be reconsidering,” according to the Barclays note.

Here are some of the other top analysts’ thoughts on Tesla’s earnings:

Jefferies recommends a hold with a price target of $700.

‘A strong second-quarter surprise, with record clean margins and a solid sequential ASP (average selling price) recovery even ahead of new Model S/X ramps.’ Despite ongoing supply chain issues, the outlook remains unchanged but sounds more confident. The consensus for the fiscal year appears to be quite conservative.”

Piper Sandler is rated overweight with a price target of $1,200.

“TSLA shares are up slightly in after-hours trading following Q2 results that were better than expected. This stock remains one of our more confident long-term holdings, with significant upside from market share growth, full self-driving (FSD) software, and underappreciated opportunities in the Energy business.”

Evercore ISI – In line, with a price target of $650.

“If this was Elon’s last regular EPS call in which he participated…it was a GOOD ONE! TSLA’s profit margins are improving…. Given revenue scaling in the coming years, this should drive an industry-leading high-teens margin business (before any help from FSD software potential)….

Wells Fargo – Equal weight rating, price target raised from $590 to $660.

“The company largely maintained guidance as it expects to grow by more than 50% in 2021. TSLA still expects both the Austin and Berlin plants to begin production before the end of the year. CEO Musk has indicated that unless there is an important announcement, he may not participate in earnings calls on a regular basis in the future. The stock is trading higher after the market close to reflect the auto margin driven beat.”

JPMorgan – Underweight, with a $180 price target up from $160.

“As we have previously stated, Tesla’s high valuation leaves little room for less-than-perfect execution, as evidenced by a relatively tepid reaction in the aftermarket Monday to what was a fairly sizable EBIT beat, and we did see some less-than-perfect takeaways, including: the official delay of the Tesla Semi into 2022 (albeit likely already almost entirely baked in); the apparent delay of the Tesla Semi into 2023 (albeit likely already almost entirely baked in); the apparent delay of the

Bank of America has raised its neutral price target to $800 from $750.

“While TSLA is clearly a market pioneer and has successfully differentiated itself as an EV incumbent versus newer EV entrants, TSLA’s operating environment is shifting from a vacuum to an increasingly crowded space. And, while it remains to be seen whether or not TSLA will be dominant in the long run, we continue to believe that its high stock price will be justified as long as the company can fund outsized growth (new model introductions, capacity installation, etc.) with little to no cost of capital, as it has over the past decade.”

Citi recommends a sell with a price target of $175.

“The quarter demonstrates Tesla’s strong execution in a volatile operating environment, though some of the factors driving Q2 margin growth appear to be common across automakers this quarter. Aside from the numbers, we thought some of the updates on the call were less than positive, particularly with regard to FSD status/timing, despite FSD being a key component of our current risk/reward assessment on the stock. Overall, our initial impressions are mixed, as Q2 delivered strong financial performance but with company updates that are unlikely to change the LT bull/bear debate significantly.”

RBC – Sector perform, with a price target of $745 up from $718.

“Margin performance was very impressive and adds upward pressure to our forecast in what could be Elon’s final EPS call (except for important announcements). This is offset by product pushout and lower volumes for the 4680, Semi, and Cybertruck.”

Credit Suisse is neutral, with a price target of $800.

“The clear highlight of Tesla’s second-quarter print was a strong gross margin in the face of challenging conditions.”

Supply chain issues – Tesla’s best auto gross margin ex credits since the first quarter of 2017. The strength of Tesla’s gross margins serves as a reminder of the lever it has to eventually lower prices in order to boost volume. Nonetheless, with supply issues likely to be transitory, we believe the stock should be rewarded post-print on the strength of the margin.”

Cowen – Market perform with a price target of $562.

“Given the challenging macro backdrop and chip shortage, Tesla delivered solid execution in 2Q21….” As is customary, everything will come down to the 10-Q review, which will provide more information. Musk’s decision not to participate in future earnings calls will be a source of concern for investors and the media. Overall, it was a good quarter with some noise.

Bernstein’s rating is underperform, with a price target of $180.

“We continue to struggle to justify TSLA’s valuation, which is higher than the combined valuation of all other major automakers and appears to imply massive volume AND industry-leading profitability in the future, which is historically unprecedented.”

Goldman Sachs – Buy, with a price target of $875 up from $860.

“We keep our Buy rating on the stock, and we believe that Tesla’s strong automotive gross margin this quarter, despite multiple headwinds, as well as the company’s plan to materially increase capacity, are positive signs for Tesla’s forward earnings potential. We also believe that Tesla’s leadership in EVs (and its entire ecosystem for clean transportation, which includes a charging network, solar, and storage) and automotive technology positions it well in the long run.”

Morgan Stanley rates it as overweight, with a price target of $900.

“While the likely direction of Tesla estimates is slightly higher, we do not see a significant change in narrative for bulls or bears. We note that roughly 40% of our $900 PT is related to the ‘core auto’ business, while nearly 60% is driven by Tesla’s existing business and emerging opportunities in energy, mobility/ride-share, insurance, third-party battery/powertrain, and network services.”

Canaccord Genuity – Buy, price target reduced to $768 from $812

“Tesla delivered a surprisingly strong second quarter. We keep our BUY rating as our multi-year thesis of Tesla’s strategic move to dominate the solar and energy storage markets comes into focus.”

Mizuho – Buy, with a price target of $825 up from $820.

“We are reiterating our Buy rating and raising our price target to $825 as we continue to see TSLA and NIO as well positioned in a secular EV market as legacy original equipment manufacturers struggle to balance their portfolios between ICE and EV. Even with supply chain headwinds, we had a good JunQ with solid volumes.”

Baird – Outperform, with a price target of $764 up from $736.

“Tesla reported 2Q21 results that should bolster long-term bulls given the significant margin leverage demonstrated despite multiple headwinds in the quarter. As the world shifts to EVs and battery storage, Tesla continues to demonstrate not only revenue growth but also margin and earnings leverage.”