Tesla Inc (NASDAQ:TSLA) is expected to report solid third quarter vehicle delivery numbers next week above Street expectations, analysts at Wedbush believe.
They see the automaker posting deliveries in the range of 465,000 to 470,000 above the Street’s 462,000 unit bogey.
They see the third quarter as a “major step in the right direction” for Tesla.
“After a bumpy 1H for [CEO Elon] Musk & Co as the company saw softer EV demand along with the broader industry earlier in the year, we believe Q3 will provide a solid rebound looking to 2H for the company as China continues to heat up and price/demand stabilization has continuously been seen throughout the quarter,” they wrote.
There is strength in China, with favorable leasing or financing terms and pent-up demand.
“We are confident that we will see a significant growth figure in the region for its Q3 performance as the company has seen a record few months in this key region leading up to the fourth week in September and should show clear upside in the quarter,” they wrote.
“Europe continues to be a slight overhang with EU subsidies and macro pressures, but we believe will ultimately be offset by US demand stabilization and other regions throughout the world showing improving demand for Tesla with China clearly the star of the show this quarter.”
Wedbush continues to expect that Tesla will hit 1.8 million deliveries for fiscal 2024, describing this as a “solid feat given the extensive white-knuckle moments seen throughout the first half of the year.”
Tesla’s upcoming Robotaxi event on October 10 is also set to provide notable updates on the company’s Full Self Driving (FSD) and AI efforts.
“We remain confident in the Tesla story as we believe this Q3 deliveries print could be a major step back in the right direction with the turnaround story underway fueled by a strengthening backdrop and key innovations in AI/FSD space propelling the company forward,” the analysts wrote.
“Importantly we believe price cuts are now mostly in the rear-view mirror and should remove a margin overhang from the Tesla story which has plagued the name over the past year. We believe gross margins should finally start to rebound from these levels with Q3 a big step forward.”
Analysts repeated their ‘Outperform’ rating and $300 price target on Tesla, implying upside of about 17% from Tesla’s share price at the time of writing.