Tesla Faces Volume Pressure in Demand-Constrained Market, Analyst Warns

Barclays's Dan Levy lowered their price target on Tesla (NASDAQ: TSLA) by 3.8% from $260 to $250 on 2024/01/18. The analyst maintained their Hold rating on the stock.

Levy's price target adjustment is based on their concerns about Tesla's volume pressure in the demand-constrained backdrop of 2024. They highlight that for the first time, Tesla's volume is primarily driven by demand rather than its production capacity. This shift may lead investors to revise their long-term volume expectations.

According to Levy's report, Barclays expects Tesla to deliver 1.97 million vehicles in 2024, falling short of the 2.19 million-unit consensus. This would represent a 9% year-over-year growth in deliveries. The possibility of disappointing 2024 volume guidance around 2 million units is not ruled out, but Levy suggests that CEO Elon Musk could potentially generate interest on the earnings call by claiming a potential range of 2.2 million to 2.4 million units if the macro and rate environments are more supportive.

It is worth noting that despite the concerns highlighted by Levy, the majority of top-rated analysts still maintain a positive outlook on Tesla. Currently, 66.7% of top-rated analysts rate TSLA as a Strong Buy or Buy, while 33.3% see it as a Hold. No analysts recommend or strongly recommend selling the stock.

In terms of earnings per share (EPS) expectations, the consensus forecast among analysts is that TSLA's upcoming year will deliver $5.11. If the analysts' projections are accurate, this would represent a 49.9% increase in TSLA's next yearly EPS compared to the previous year.

Looking at the performance of Tesla's stock, it has experienced a decline of 15.3% since its last quarterly report on September 30, 2023. However, on a year-over-year basis, the stock has seen a significant increase of 64.5%. During this period, Tesla has outperformed the S&P 500, which has only grown by 21.7%.

Barclays analyst Dan Levy, who issued the recent rating adjustment, is ranked in the bottom 10% out of 4,455 Wall Street analysts by WallStreetZen. Levy specializes in the Consumer Cyclical and Industrials sectors and has an average return of -3.9% and a win rate of 35.6%.

Tesla, Inc. designs, develops, manufactures, leases, and sells electric vehicles, as well as energy generation and storage systems. The company operates in two segments: Automotive and Energy Generation and Storage. Tesla's Automotive segment offers electric vehicles, automotive regulatory credits, after-sales services, used vehicles, retail merchandise, and vehicle insurance. The Energy Generation and Storage segment focuses on solar energy generation and energy storage products, alongside related services for residential, commercial, and industrial customers.

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