Deutsche Bank raises estimates ahead of Tesla’s 2Q delivery report

Deutsche Bank reiterated a Buy rating on Tesla (NASDAQ:) and raised their 12-month price target on the stock to $230.00 (From $200.00) ahead of the company’s 2Q23 deliveries and earnings report.

Tesla is scheduled to report its delivery and production numbers for the second quarter of 2023 during the upcoming weekend. Deutsche Bank revised their estimates for the second quarter’s deliveries to 448,000 units, indicating a 76% year-on-year increase and a steady 6% quarter-on-quarter growth. Deutsche Bank estimates Tesla delivered about 153k units of Model 3+Y in China, with the rest to come from North America (168k), Europe (87k), and the rest of the world (23k).

Deutsche Bank raised their 2Q revenue estimates to $24B (From $23.5B), roughly in line with the Street’s revenue estimate of $24.3bn. At the same time, they also raised gross margin estimates from -200bps q/q previously to -140bps q/q, 17.6% for the quarter. The revised estimates take into account the price reductions implemented earlier in the quarter, as well as subsequent smaller price increases, particularly on the Model Y.

Deutsche analysts wrote in a note, “Beyond the quarter, we still see risk of additional price cuts over the rest of the year and into 2024. At our recent DB Global Autos Conference, Tesla reiterated it would continue to stay nimble with pricing, and while its costs will come down in the remainder of the year, the company indicated the more important question remains whether they will come down at the same pace as price should it need to take further cuts.”

Deutsche Bank raised their 2Q EPS estimate to $0.79 vs. prior $0.73, in line with the current Street EPS forecast $0.79.

Shares of TSLA are down 1.05% in pre-market trading on Monday.