Tesla Inc. TSLA is reportedly restarting production at its Giga Shanghai factory, which was shuttered for a record duration amid the COVID resurgence in China.
Against this backdrop, analysts and fund managers have begun reworking their Tesla models to include the potential impact.
Piper Sandler Trims Volume Forecast: Tesla's Giga Shanghai, which was shuttered since March 28, was producing about 2,000 units per day ahead of the shutdown, Piper Sandler analyst Alexander Potter said in a Monday note.
Assuming a near-term restart, the analyst said he estimates over 35,000 units of lost production. The analyst lowered his deliveries estimate for 2022 from 1.58 million units to 1.54 million units. The earnings per share forecast for the year is also being lowered, although it is still above the current consensus, the analyst said.
Potter expects China lockdowns to continue to impact production in the second half of 2022.
"We would buy any resulting weakness," the analyst said.
Piper Sandler also reduced the price target for Tesla shares from $1,350 to $1,260.
Related Link: Tesla Shanghai Workers Forced To Live 24/7 At Reopened Factory
Future Fund's Model Tweak Doesn't Warrant Price Target Cut: Factoring in 17 days of plant closure in April and a slow ramp for the rest of the quarter, the 2022 volume estimate has now been reduced from 1.6 million units to 1.42 million units, Gary Black, co-founder and managing partner at Investment advisory firm Future Fund said.
The lowered estimate also accounts for a reduction in the delivery estimate for Giga Berlin from 100,000 units to 65,000 units and for Giga Austin from 100,000 units to 60,000 units, the analyst said.
The analyst lowered his 2022 non-GAAP EPS estimate from $12.80 to $11.60, but maintained the 2023 number unchanged.
Even with Black's reduced volume estimate for 2022, Tesla can still hit its long-term goal of over 50% growth.
Given that COVID impact on production in China is a one-time event, Black's price target for the stock is unchanged at $1,600.
Tesla closed Monday's session 1.96% higher at $1,004.29 and was seen adding an incremental 0.67% in premarket trading on Tuesday.
Photo: Courtesy of tesla.com
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