Barclays Reiterates Equalweight Rating on Tesla, Highlights Potential Challenges

Barclays analysts reiterated their Equalweight rating on Tesla (NASDAQ:TSLA) stock with a price target of $180.

The analysts expect Tesla to report second-quarter deliveries of approximately 415,000 units, a decline of 11% year-over-year and below the Street estimate of 444,000 units. However, this figure might align with more conservative buy-side expectations. The second quarter has shown notable weakness in Europe, and production is expected to be around 420,000 units, indicating a further build-up in inventory.

Margins for Q2/24 may reach a new low, with further negative EPS revisions anticipated. Although much of the current focus on Tesla has shifted to its strategic pivot toward autonomous vehicles (AV) and artificial intelligence (AI) rather than vehicle manufacturing, the analysts believe that a weak delivery report could redirect attention, at least temporarily, to the challenging fundamentals Tesla is currently facing. This could lead to continued downward revisions for Tesla's 2024 and 2025 estimates.