Tesla Inc (NASDAQ:TSLA) shares are down Thursday following the company’s second-quarter earnings, but analysts at Wedbush have taken a more bullish stance.
The firm maintained its Outperform rating for the Elon Musk-led electric vehicle producer and upped its price target to $350 from $300.
Meanwhile, shares of the company fell 6.3% Thursday morning to $272.13.
Gross margin was a concern for investors, as the metric fell to 18.2% from 19.3% last quarter thanks in part to price decreases on its EVs.
Wedbush sees things differently, though.
“Last night was another poker win for the Tesla story as Musk & Co. came in with Auto [gross margins] of 18.1% which was above the Street's line in the sand and whisper numbers of 17.5%,” the analysts wrote.
“While margins are clearly coming down significantly from the mid 20% level over the past year this was the smart strategy for Tesla to catalyze volumes as the multiple price cuts have been in a homerun success in China, Europe, and the US.”
In their view, Tesla’s margins are in “stablization mode” with a rebound likely coming in the fourth quarter.
That’s in part due to deliveries of Cybertruck, which the analysts expect to begin in December.
Then there’s the question of if and when Tesla’s full self-driving (FSD) technology will become widely available.
“One of the most important comments from the conference call was Musk discussing FSD and Tesla for the first time confirming the company is already in discussions with one major OEM about licensing FSD technology,” analysts wrote. “To us, this is the ‘golden vision’ as Tesla is now monetizing its super charger network with batteries and AI/FSD next adding to the sum-of-the-parts story for Tesla.”
“In a nutshell, we view Tesla where Apple was in the 2008/2009 period as Cupertino was just starting to monetize its services and golden ecosystem with the Street not seeing the broader golden vision at the time,” they added.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
Follow him on Twitter @andrew_kessel