Tesla shares moved higher in pre-market trading on Monday after analysts at Barclays reiterated their bullish outlook for the electric vehicle (EV) manufacturer ahead of the release of its first-quarter deliveries and production numbers.
The analysts forecast a modest beat from deliveries in 1Q 2023, projecting 425,000 deliveries against the consensus expectation of 420,000. Tesla delivered 405,000 vehicles in the same quarter last year.
They also expect Tesla to continue to cut the prices of its EVs, the analysts wrote in a note to clients.
“We believe price cuts are likely to be core for Tesla in unlocking additional volume, especially as Tesla ramps on further capacity,” they wrote.
They reiterated their ‘Overweight’ rating for stock and price target of $275 on their view that Tesla’s unique ability to balance short-term gains with long-term objectives sets it apart from its competitors such as Ford.
If the company continues to cut prices, the analysts wrote that they believe the company could see reasonable margins on its EVs while gaining market share.
However, the analysts also pointed out that Tesla’s inventory was likely to remain elevated.
“While we appreciate that Tesla inventory is likely low relative to other automakers, the increase in inventory has been unusual for Tesla, which has historically operated tight on inventory given its use of a build-to-order mode,” the analysts wrote.
Tesla shares had added 2.1% at US$194.38 before the opening bell in New York.
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