Despite the shutdown of Tesla’s main vehicle production facility in Fremont for the majority of the second quarter, the company stands good chances of finishing the second quarter in impressive fashion.
Next week, the second quarter ends, and companies will release reports on their performance in the peak of coronavirus and the post-pandemic period. Tesla Inc (NASDAQ: TSLA) will report on its production and deliveries in Q2 as well. While some doubt its results will be impressive, Deutsche Bank is optimistic about Tesla’s second-quarter figures. Against this background, Deutsche Bank analyst Emmanuel Rosner raised his price target for Tesla stock to $900 from $850 on Friday.
Rosner said:
“Despite about 7 weeks of downtime at the Fremont plant, we think Tesla’s 2Q global production could be in the mid-70K range, ahead of buy-side consensus in the mid-60s.”
Notably, Rosner’s price target is 8.7% below Tesla’s $985.98 closing price on Thursday. On Friday, after the Deutsche Bank analyst’s statement, Tesla stock gained 0.8% in pre-market trading. The opening price was $994.78 per share, and the stock ended the session at $959.74, or 2.66% down. After hours, Tesla stock further declined by 0.34% to $956.50.
Tesla in Q2: What to Expect
According to Rosner, despite the shutdown of Tesla’s main vehicle production facility in Fremont for the majority of the second quarter, the company stands good chances of finishing the second quarter in impressive fashion.
Deutsche Bank expects deliveries of 76,000 Tesla vehicles in Q2, of which 60,000 would be Model 3 sedans.
Emmanuel Rosner said:
“We estimate Tesla was able to produce 34,000 Model 3 units out of the Shanghai (factory) and about 21,000 in Fremont. But we do not believe Tesla was able to reach full Model Y production levels.”
However, he is skeptical about Tesla’s ability to reach full Model Y production in the period. According to Rosner, they estimated Model Y production between 10,000 and 13,000 units in the second quarter, or roughly 300 a day.
FactSet analysts expect Tesla’s Q2 deliveries to total 67,000 vehicles. 59,600 of them would be Model 3 mass-market sedans and the remainder roughly split between sales of the Model S luxury sedan and the Model X SUV.
Analysts at Evercore ISI pegged their second-quarter sales expectations at between 80,000 and 84,000 vehicles. Besides, they believe that sales in China would offset a predicted sales decline in North America and predict a “steep decline” in sales in Europe.
Tesla will deliver its Q2 2020 report next week. It will likely put Tesla stock in rally then. Tesla stock has already more than doubled year to date and recently cracked $1,000. On June 10, Tesla stock hit a new all-time highest closing price of $1025.05. Some analysts even hazard a guess that the potential price target for Tesla is still far ahead. For example, Jefferies has boosted its price target to $1,200 per share. According to Jefferies’s upside scenario, Tesla stock can even surge to $1,400.
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