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Analyst cuts Tesla Q2 delivery expectations – suggests selling the stock

Analyst cuts Tesla Q2 delivery expectations - suggests selling the stock
Dino Kurbegovic

Tesla (NASDAQ: TSLA) can’t seem to catch a break with yet more negative news for the company. This time it comes in the form of another cut from analysts. Namely, On Tuesday, June 28, Itay Michaeli, Citigroup (NYSE: C) analyst cut the second-quarter delivery and earnings estimates, with the new delivery estimates at 258,500 units and a recommendation to sell the shares. 

Michaeli cited the headwinds the firm is facing in China, which will disrupt its margins in the second quarter; he also added that auto gross margins would reach 26.5% in Q2 and 29.5% for the whole year. Further lowered operating expenses are expected due to the company cutting costs and streamlining its headcount; however, earnings per share (EPS) are expected to come in 2% lower than initially expected. 

Moreover, Deutsche Bank analyst Emmanuel Rosner also cut his Q2 estimates for Tesla to 245,000 units, citing similar worries to his colleague from Citi. 

“We cut our 2Q deliveries estimate by 65k to 245k units, reflecting a prolonged Covid-19-related shutdown and logistical challenges in the Shanghai factory,” Rosner said.

TSLA chart and analysis 

In the last trading session, the shares closed below all daily Simple Moving Averages (SMAs) but still stayed range-bound between $620 and $792. The last few trading sessions have seen reduced volumes, possibly indicating that the shares could trade sideways in the near term. 

TSLA 20-50-200 SMA lines chart. Source. data. See more stocks here.

Meanwhile, TipRanks analysts rate the shares a moderate buy. Further, for the next 12 months, the average price predictions are 31.28% higher from the current trading price of $685.47, with analysts seeing the shares potentially trading at $899.86.

Wall Street TSLA analysts’ price targets for TSLA. Source: TipRanks

Finally, most of Wall Street is a bit more optimistic than the Citi analyst, who has a price target of $375 on the stock, while the average is around $899, the most bullish analysts see shares trading at $1,580. 

Despite the shares falling in the last session, it probably wasn’t due to cut expectations by analysts, but more to the entire Nasdaq index being down as electric vehicle (EV) stocks got hammered. 

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