Tesla Inc. is expected to post delivery numbers over the weekend, and one analyst is upbeat that momentum in China will help power growth.
Deutsche Bank’s Emmanuel Rosner just upped his delivery expectations to 448,000 from 438,000 for the second quarter, with his new projection implying 6% sequential growth and a 76% uptick in Tesla
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deliveries relative to a year before. His revised target was also slightly ahead of the 445,000 FactSet consensus.
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Rosner’s updated delivery view reflected “sequential volume growth post the pricing actions the company has taken thus far this year, with China coming in particularly strong,” he wrote in a Monday note to clients, while reiterating a buy rating and lifting his price target on the shares to $260 from $230.
“As it relates to China, Tesla has registered close to ~130k units [quarter to date] through mid-June, with particular strength coming on in the second half of quarter,” he wrote. “During the first half of June, the company registered 40.6k units in China, and if registration trends hold up, we can see some upside to our China deliveries assumptions.”
Rosner noted that his expected China momentum comes even as Tesla slightly brought up Model 3 and Model Y prices in May.
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Elsewhere, he flagged 43,600 European registrations from the start of the quarter through May, while “more than half of deliveries in Europe are typically delivered in the last month of the quarter.”
Plus, North America Model Y deliveries could be “solid,” in his view, “though Model 3 volume could see some sequential volume decline.”
What do delivery trends mean for Tesla’s financials? Rosner lifted his second-quarter revenue projection to $24.0 billion from $23.5 billion, and he updated his sequential gross margin growth expectations, excluding credit, to negative 140 basis points from negative 200 basis points. That new view of margin growth came as he saw the prospect of a “slightly lower sequential decline” in average selling prices given a couple of small price hikes.
Tesla shares were falling about 1% in Monday trading, after Goldman Sachs analyst Mark Delaney downgraded the stock in the wake of a sharp recent rally and his concerns about the selling environment for new cars. Tesla’s stock is ahead 31% over the past month and up 105% on the year.
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