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Goldman Sachs Still Bearish On Tesla Ahead Of Tax Credit Cut

Goldman Sachs Still Bearish On Tesla Ahead Of Tax Credit Cut

Tesla, Inc. (NASDAQ: TSLA) has had a love-hate relationship with Wall Street in recent years. Since the company’s impressive third-quarter earnings report, commentary has been mostly bullish, but one analyst reiterated his bearish outlook for Tesla.

The Analyst

Goldman Sachs analyst David Tamberrino reiterated his Sell rating and $225 price target for Tesla, implying about 35 percent downside from recent levels.

The Thesis

The analyst said improvements in Model 3 production, pent-up demand and tax credits have boosted Tesla’s numbers, mix and its share price. Starting on Jan. 1, however, the $7,500 tax credit for electric vehicles will be reduced by 50 percent.

“As a result, we believe there is a pull-ahead of deliveries and option mix occurring in the US in 2H18 that will likely create a lull in demand starting in 1Q19 that may not be fully made up by initial deliveries across Europe,” Tamberrino wrote in a note.

He also said the majority of the long-term demand for Model 3s will come from the low end of the vehicle’s pricing range, creating a mix shift that will weigh on Tesla’s margins.

Goldman is projecting full-year gross margin of 18.9 percent in 2018, 18.6 percent in 2019 and 18.9 percent in 2020.

Looking ahead to fourth-quarter numbers, Tamberrino said Telsa will likely announce Q4 deliveries that are up compared to a year ago but down slightly compared to Q3. Goldman is calling for 14,000 Model S deliveries, 13,000 Model X deliveries and 63,000 Model 3 deliveries in the quarter. Goldman is also estimating a full-quarter Model 3 production rate of 5,200 vehicles per week.

Price Action

Tesla stock traded lower by 1 percent Tuesday to $344.87 per share and is down about 5.7 percent in the past week.

Related Links:

Tesla Has 'Apple-Like Consumer Brand' Potential, Wedbush Says In Bullish Initiation

12 Hilarious Wall Street Twitter Accounts

Latest Ratings for TSLA

Feb 2021Morgan StanleyMaintainsOverweight
Feb 2021Piper SandlerMaintainsOverweight
Jan 2021Deutsche BankMaintainsBuy

View More Analyst Ratings for TSLA
View the Latest Analyst Ratings


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