Analysts have started to put on their battle gear for what will be a big earnings report from Tesla (NASDAQ:TSLA) later in the week when the electric vehicle automaker will update on its production run rates out Shanghai, Berlin, and Austin.
Deutsche Bank added Tesla to its short-term Catalyst Call Buy List ahead of the company's earnings day when TSLA is seen topping low Street expectations for Q2 margins, driven by good cost execution and continued pricing strength. Crucially, Tesla (TSLA) is also expected to reiterate full-year deliveries guidance for growth of 50%, which would imply a considerable volume ramp in the second half.
"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."
The 30% YTD drop in Tesla's (TSLA) share price is said to largely reflects supply issues that are fast improving, providing investors a compelling opportunity to accumulate shares into the second half-2023 where volume growth and margin expansion could be meaningful.
Barclays also expects Tesla (TSLA) earnings to come in above the current expectations.
Analyst Brian Johnson and team sees a modest Q2 EPS beat vs consensus but also think a greater focus could be seen on free cash flow given CEO Elon Musk's comments last month that Berlin and Austin are gigantic money furnaces. Johnson reminded that Tesla will need to report an impairment of roughly $460M or $0.40 per share due to the cryptocurrency's price decline.