Tesla's 'Autonomy Day' fell flat with analysts - now Wall Street is bracing for its Q1 results

Rebecca UngarinoApr 24, 2019, 21:00 IST

Elon Musk at the unveiling of Tesla's new RoadsterTesla

Tesla is scheduled to report first-quarter earnings after Wednesday's closing bell, and analysts expect investors to be laser-focused on demand levels and second-quarter guidance.
The electric-car maker held an autonomous-vehicle investor event on Monday, which Wall Street analysts saw as a distraction from key issues surrounding the company.
Tesla is unlikely to turn a profit in the first-quarter, CEO Elon Musk said in February, reversing his previous forecast.
Watch Tesla trade live.

Tesla is expected to report a messy first-quarter.

The electric-car maker is scheduled to report quarterly results after Wednesday's closing bell - two days after holding an autonomous-vehicle investor event that analysts said was likely timed to shift focus away from key issues surrounding the company.

"We saw the Autonomous Investor Day as underwhelming," Roth Capital Partners analyst Craig Irwin told clients on Tuesday. "Tesla made bold claims that were largely missing the substance that drives credibility. With now two attempts at investor redirection in front of 1Q19 earnings (first was Model Y), we expect a weak 2Q19 unit guide."

Tesla CEO Elon Musk had already warned investors in February that it was unlikely to turn a profit in the first-quarter, a reversal from his previous forecast. Shares have fallen 21% so far this year and 37% since putting in a 52-week high last August.

Analysts expect Tesla to post a first-quarter loss of $2.32 a share on revenue of $4.84 billion, according to data compiled by Bloomberg. Its adjusted loss is expected to come in at $1.30 a share.

Wall Street analysts have become increasingly negative on Tesla shares in recent months, with the number of "sell" ratings on Wall Street now topping the "buys." Of analysts polled by Bloomberg, 15 carry "sell" ratings, 13 say "buy," and eight suggest "hold."

The firm Evercore ISI on Monday downgraded its view and slashed its price target by a hefty $90 a share due in part to softening demand.

"We remain encouraged by Tesla's vision and future growth prospects (brand value, global Model 3 and Y TAM, Semi, etc.), but there is increased uncertainty around near-term demand vs previous bullish forecasts and growth cannot stall for a growth company," analysts led by Arndt Ellinghorst wrote, adding their new price target was $240, down from $330.

Here's a snapshot of what Tesla analysts are saying ahead of Tesla's first-quarter earnings:

See Tesla's 'Autonomy Day' fell flat with analysts - now Wall Street is bracing for its Q1 results >>

Roth Capital Partners: 'Autonomous Smokescreen Likely Deployed to Hide Weak Unit Outlook'

Rating: Neutral

Price target: $240

First quarter results "have already been telegraphed as weak, and we expect investor focus to remain cash and short term deliveries," analyst Craig Irwin wrote in a note to clients out Tuesday.

"With now two attempts at investor redirection in front of 1Q19 earnings (first was Model Y), we expect a weak 2Q19 unit guide."

JP Morgan: 'Remain Cautious on TSLA'

Rating: Underweight

Price target: $200

"Maintain already lowered estimates following 1Q18 Model 3 deliveries disappointment," analysts led by Ryan Brinkman wrote in a note to clients on Monday.

The firm's estimates reflect Tesla's soft first-quarter deliveries "and flow-through of what we see as reduced underlying demand going forward for the higher ASP S & X," referring to the higher average selling price of the Model S and Model X.

Evercore ISI: 'Demand concerns rising'

Rating: Underperform (downgraded from "in-line")

Price target: $240 (from $330)

"The change in recommendation and lower PT are driven by a more cautious view on demand across all Models (M3 global/SR+ launch), but in particular the recent severe decline in demand for Model S/X," analysts led by Arndt Ellinghorst told to clients on Monday.

Goldman Sachs: 'Focus is diverted from demand and margin headwinds, while potential autonomous success still uncertain'

Rating: Sell

Price target: $210

"Heading into and coming out of the event, our investor conversations were mixed — but more cautious given upcoming earnings," analysts led by David Tamberrino wrote in a note to clients on Tuesday.

"In the near-term, there were concerns about demand — not just sustainable demand levels for the Model 3 but also questions as to the drop-off in Model S/X deliveries in 1Q19."

The firm lowered its first-quarter EBITDA estimate to around $400 million, reflecting a 31% drop from its prior estimate.

Oppenheimer: 'We are lowering Model S & X deliveries in our 2019 estimates'

Rating: Outperform

Price target: $437

"Beyond Model 3 demand and cost reduction driving operating cash flow, we believe the Model S & X refresh cycle and pricing strategy are in focus for short-term investors while the longer term story is increasingly weighted to China sell-through," analysts led by Colin Rusch wrote in a note to clients out last week.

Rusch and his team lowered their Model S and Model X 2019 delivery expectations, but maintained their long-term bullish view.

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