Wedbush analyst Daniel Ives maintained the Outperform rating at Tesla Inc
The analyst believes Tesla is gaining market share in China, its key market, amid price wars, as evident from the record China quarter in Q2 (based on analyst estimates).
The analyst notes that Q2 deliveries of 466k strongly beat the consensus estimate and aided the stock's upward movement, which is expected to continue into H2.
Ives also writes that Q2 headline numbers of $25 billion and $0.81 seem beatable.
However, the analyst thinks the impact of price cuts on Auto gross margin (ex-credit) and overall margins will be a key focus in Q2 earnings results.
Ives expects the Auto gross margin of around 17.5% to ramp up towards a 20% level in 2024.
The analyst believes although the aggressive pricing cuts weighed on the near-term, they can deliver long-term gain, with the company gaining new EV customers amid a sluggish environment.
Ives thinks Tesla's EV game is strong with its supercharger network, battery technology, and FSD software ecosystem, which is unmatchable to other auto players.
With the street finally recognizing Tesla's partnership with Ford Motor Co
Ives estimates EPS of $3.33 in 2023 and $4.65 in 2024. The analyst expects an FCF of $10 billion in 2026.
Price Action: TSLA shares are trading higher by 1.78% at $286.39 on the last check Monday.
