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Key Points

• Tesla reported a record variety of cars produced and delivered for Q2. 
• The news means the Q2 consensus figures are well below what the market should expect. 
• Analysts have begun raising their price targets and are supporting a rally in stock prices. 
• 5 stocks we value more highly than Tesla

Tesla (NASDAQ:TSLA) was expected to extend production and set a record, however the Q2 results were shocking. The corporate produced 479,700 vehicles within the quarter and delivered 466,140 in comparison with the expected 445,000. That’s 4.7% greater than expected, up 10% sequentially and 83% in comparison with last 12 months.

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If anyone had doubts concerning the efficacy of Elon Musk’s decision to lower prices, they ought to be put to rest. The corporate is predicted to post earnings in mid-July and can almost definitely outpace the present consensus by a large margin. 

Tesla Will Outperform Consensus In Q2

Due to macroeconomic headwinds, the analysts have been reducing their revenue and earnings targets over the previous few months. That has the bar set low at $24.47 billion in top-line revenue, which is nice for a gain of only 45% in comparison with last 12 months. That figure includes the string of price reductions but grossly underestimates top-line performance, given the uptick in deliveries. The query is how earnings can be impacted.

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The worth reductions will impact the margin, but the rise in deliveries will provide leverage. Moreover, some price increases toward the top of the first half will help amplify the outlook for the 2nd half, if not the 2nd quarter results. The analysts expect earnings to rise YOY but fall in comparison with Q1, which is one other underestimation of the corporate’s strength. 

The analysts’ activity in Tesla is mixed in 2023, however the trends are shifting and helping to lift the worth motion. The consensus rating of 36 analysts is a Hold which is down from a more solid Hold last 12 months. The activity since January 1 includes quite a few price goal reductions and downgrades which have the stock on Marketbeat.com’s Most Downgraded Stocks list.

The caveat is that probably the most recent analyst actions, including the first 5 revisions following the delivery update, are very bullish. 

Those 5 revisions include 5 price goal increases that put the market above the present consensus price. The consensus price is about 25% below the present market motion but is moving higher than last month. The range of recent targets features a low price of $120, but that’s an outlier. The opposite 4 have the stock trading between $240 and $293, which is closer to fair value with shares at $280. Assuming this trend continues, and it should give the news, the consensus goal will proceed to rise, and the sentiment may begin to firm. 

Tesla Establishes Dominance Of EV Infrastructure 

Tesla, already the dominant EV OEM, can also be making significant strides toward dominating the EV infrastructure market. The corporate’s charging system is fast becoming an industry standard, meaning TSLA-branded charging stations will see increasing demand. The most recent news is from SAE International, which sets standards for the automotive industry.

In a release, SAE International said it could support Tesla’s charging structure and make it an ordinary feature for industry products. Any manufacturer or supplier can use or deploy the usual on cars or charging systems nationwide. Tesla’s network of NCAS standard charging stations is already greater than 50% larger than the opposite existing standard. 

Shares of TSLA shot up greater than 7% on the news. The move breaks the market out of consolidation and indicates continuing the trend. The following goal is almost $315, which could also be reached by the Q2 reporting date. If the Q2 results are as strong as expected, the market could move through $315 on its way back toward the $360 level. 

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