A Curious Outlook
As Tesla, Inc. prepares to announce its fourth-quarter results, concerns regarding the price target of a bullish analyst have been raised by seasoned fund manager Gary Black.
Adam Jonas of Morgan Stanley recently revised his estimates for Tesla, expressing apprehensions about the year ahead for electric vehicles. He lowered the 2024 adjusted earnings per share estimate from $2.41 to $1.98, which raised eyebrows in the investment community.
Jonas’ adjustment led to a lowered price target from $380 to $345, attributing the reduction to multiple factors impacting Tesla’s core auto business and other ventures.
Gary Black, who is optimistic about Tesla and holds it as the third-highest holding in Future Fund Active ETF (FFND), was taken aback by Jonas’ estimate, considering that it is significantly lower than the consensus estimate of $3.82 despite having the second-highest price target among 50 Tesla analysts.
A Battle of Estimations
Black, a strong proponent of Tesla, has his 2024 estimate at $3.75 per share, which contrasts starkly with Jonas’ estimates. Black sees Jonas’ estimate as implying 2024 deliveries of 1.8 million units and an auto gross margin of 10%. He expressed doubt whether the Morgan Stanley sales team could convincingly justify the discrepancy in the analyst’s outlook and price target for Tesla.
Why It Matters
The disparity in Jonas’ forecasts has drawn attention, especially given his upbeat assessment of Tesla in the past. In September 2023, Jonas had placed a Street-high price target of $400 on the company, based on the potential impact of Tesla’s Dojo supercomputer. This assessment was later revised down to $380 following Tesla’s third-quarter performance miss.
Tesla’s impending fourth-quarter results and its stock performance are hanging in the balance. The company is expected to report an adjusted earnings per share of 74 cents and revenue of $25.547 billion, crucial metrics that could either bolster or dampen investor sentiment.
At the end of Monday’s trading session, Tesla’s stock closed at $208.80, signaling a subdued trading range and reinforcing the significance of the impending results.