Morgan Stanley reaffirmed its overweight stance and lowered Tesla, Inc.’s (NASDAQ:) price target to $350 (from $383) following the company’s failed third-quarter deliveries.
The bank believes that the factors that led to weaker-than-expected production and shipments in the third quarter could continue to present headwinds in the fourth quarter and fiscal year 23. Their revised forecast calls for an automotive gross margin of 25 .0% in the 3rd quarter 23, compared to 26.2% in the 2nd quarter. FY23 clean automotive gross margin estimates are 24.5%.
Morgan Stanley believes that Tesla is currently going through a peak in automotive margins. Tesla analysts wrote in a note: “We believe there may be more room for the consensus to appreciate the near-term margin headwinds resulting from the commissioning of two gigafactories in two different continents at the same time in the current environment.”
Morgan Stanley remains bullish on the electric vehicle maker as it looks forward to Tesla’s “X” master plan, which is expected to be released soon after the company’s third-quarter results are released. This most recent iteration of Tesla’s long-term strategy is expected to focus on supply chain re-architecture and meaningful changes in manufacturing, sourcing and scale.
Shares of TSLA closed down 0.05% on Monday.
By Michael Elkins