Tesla set to "outperform" on strong deliveries in quarter - Wedbush

(Alliance News) - Tesla Inc has the potential to deliver ahead of its delivery unit goal for the fourth quarter, argued analysts from Wedbush Securities on Wednesday, based on strong data out of China.

The Austin, Texas-based electric car manufacturer is currently tracking slightly ahead of the 480,000 delivery unit bogey for the quarter, said Wedbush analysts Daniel Ives, John Katsingris, and Steven Wahrhaftig.

This comes after the firm reported a decline in new auto deliveries in the third quarter, and following a product recall in the US.

For the three months to September 30, deliveries were 435,059, down about 7% from the three-month stretch before. Production declined 10% from the second quarter to 430,488.

On July 19, Chief Executive Officer Elon Musk had indicated that volumes would be lower that quarter as a result of summer shutdowns for factory upgrades. Though the factories undergoing maintenance weren't specified, at the time, Wedbush analysts attributed the volume fall to "longer-than-expected" downtimes in Shanghai and Austin.

Tesla was also forced to recall about two million US vehicles earlier in December, over a risk linked to its autopilot software. According to the National Highway Traffic Safety Administration, Tesla filed a safety recall, with affected vehicles to receive "an over-the-air software remedy".

Nevertheless, the fourth quarter seems to have prompted a return to fortune. Wedbush noted "clear price stabilisation globally" , with a noticeable uptick in Tesla prices across several regions, including China.

Earlier in the year, Chief Executive Officer Elon Musk made headlines after deciding to cut headlines globally, with China "front and centre". This "gives us incremental confidence in our bullish call into 2024", analysts explained, despite a year that had "clear twists and turns".

"The big debate on the street is around the price cuts and what the path looks like ahead into 2024 for Tesla with margins the key hot button issue among investors. To this point we believe margins have now stabilized and should move up from these levels with Auto GM heading back above the key 20% threshold during the course of 2024," Wedbush analysts added.

"The "golden vision" at Tesla is now monetizing its super charger network with batteries and AI/FSD next adding to the sum-of-the-parts story for Tesla. We view Tesla where Apple was in the 2008/2009 period as Cupertino was just starting to monetize its services and golden ecosystem with the Street not seeing the broader golden vision at the time. "

Wedbush maintains its "outperform" rating for Tesla, with a price target of USD350.

Tesla shares were up 0.6% at USD258.05 in the New York pre-market on Wednesday.

By Holly Beveridge, Alliance News reporter

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