Tesla's stock price target gets cut by Deutsche Bank as the EV maker faces 'considerable downside risk' to 2024 earnings

• Deutsche Bank cut its 12-month Tesla's stock price target on Wednesday.
• The bank's analysts warned that the EV maker faces headwinds to earnings growth in 2024.

Deutsche Bank Wednesday downgraded its price target for Tesla stock, warning that the electric vehicle maker's earnings face strong headwinds in 2024.

The bank reiterated its buy rating for the stock but trimmed its price target for Tesla stock to $285 a share, representing a 5% decrease from its previous $300 target. That's largely due to the muted outlook for production over the next year.

The bank predicted Tesla would report deliveries of 440,000 units in the third quarter, lower than estimates of 455,000 units. That could result in lower quarterly revenue than the bank previously estimated, at $23.3 billion, down from $24.1 billion. Meanwhile, the bank said earnings per share could fall to $0.71, down from Wall Street's estimates of $0.87 a share.

"Looking at 2024, however, we see considerable downside risk to earnings expectations, due to much lower volume outlook than the market believes," the analysts wrote.

They noted that Tesla suggested in an investor meeting that it was no longer planning to ramp up production in its Austin and Berlin factories next year to 10,000 units per week.

The bank trimmed its 2024 production outlook for Tesla to just 2.1 million units next year, down from the consensus expectation of 2.3 million units.

On a positive note, Tesla could face less pricing pressure next year, resulting in a modest price dip of 1% for its cars. The bank sees earnings per share of $3.90 in 2024, lower than consensus estimates of $4.76.

Deutsche added that the next-generation vehicle platform will the key to unlocking further growth for Tesla, and that investors are closely watching the roll out of next-gen vehicles.

"Beyond 2024, all eyes remain on Tesla's next-gen platform," the analysts wrote. "However, keeping the timeline to 2025 is critical, in our view, for investors to look past the soft 2024 and view it as a transitory year."

Tesla has enjoyed a strong run up in its stock price in 2023, with shares rebounding from a dismal slide in 2022 amid Wall Street's optimism for artificial intelligence and renewed enthusiasm for high-flying growth stocks.

Tesla stock traded around $235 a share on Wednesday, up 118% since the start of the year.