Ahead of Tesla, Inc.‘s (NASDAQ:TSLA) fourth-quarter results on Wednesday, a fund manager raised questions about the price target of a bullish analyst.
What Happened: Morgan Stanley analyst Adam Jonas cut his estimates for Tesla, citing expectations for a challenging year for electric vehicles.
He reduced the 2024 adjusted earnings per share estimate from $2.41 to $1.98, down from the $3.02 per share estimated for 2023.
Morgan Stanley’s price target dropped from $380 to $345, with reductions attributed to lower volume, average transaction price, and margins in the core auto business, as well as lower valuation for Tesla Mobility and Network Services and a cut to the valuation of Tesla Insurance, Battery, and Energy businesses.
See Also: Everything You Need To Know About Tesla Stock
Gary Black’s Perspective: Future Fund co-founder Gary Black found Jonas’ note “weird” as the analyst lowered the 2024 adjusted earnings per share estimate below the consensus estimate of $3.82, despite having the second-highest price target among 50 analysts covering Tesla.
Black, who is bullish on Tesla and holds it as the third-highest holding in Future Fund Active ETF (NYSE:FFND), has his 2024 estimate at $3.75 per share.
Black sees Jonas’ estimate as implying 2024 deliveries of 1.8 million units and an auto gross margin of 10%, with the price target including only a $75 per share contribution from the core auto business.
“The MS sales team will have a hard time with this call: ‘How does your $TSLA analyst have the lowest FY’24 Adj EPS est but the 2nd highest PT on the Street?’” said Black.
Why It’s Important: Incidentally, Jonas gave Tesla a Street-high price target of $400 in September 2023, based on the company’s Dojo supercomputer potentially adding $500 billion to enterprise value. He later reduced it to $380 in late October following Tesla’s double miss in the third quarter.
Tesla is expected to report fourth-quarter adjusted earnings per share of 74 cents and revenue of $25.547 billion.
The stock, currently in a depressed trading range, will need a robust performance and outlook to break out of this range. Black sees the fourth-quarter core auto gross margin, commentary on the margin outlook, and 2024 deliveries as key metrics that can move the…
Click Here to Read the Full Original Article at Cryptocurrencies Feed…
