Tesla reports quarterly results, Wall Street firms move to the sidelines on the stock
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Tesla reported last week Q4 adjusted EPS of 71c and revenue of $25.17B, both worse than the expected 74c and $25.62B, respectively. The company also said that, “While it did not impact Operating Income, we did record a one-time non-cash tax benefit of $5.9B in Q4 for the release of valuation allowance on certain deferred tax assets. Cash Quarter-end cash, cash equivalents and investments increased sequentially by $3.0B to $29.1B in Q4, driven by free cash flow of $2.1B and financing activities of $0.9B.”
“Our company is currently between two major growth waves: the first one began with the global expansion of the Model 3/Y platform and the next one we believe will be initiated by the global expansion of the next-generation vehicle platform. In 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023, as our teams work on the launch of the next-generation vehicle at Gigafactory Texas. In 2024, the growth rate of deployments and revenue in our Energy Storage business should outpace the Automotive business. We have sufficient liquidity to fund our product roadmap, long-term capacity expansion plans and other expenses. Furthermore, we will manage the business such that we maintain a strong balance sheet during this uncertain period,” Tesla added.
MOVING TO THE SIDELINES:
KGI Securities downgraded Tesla to Neutral from Outperform. The company’s Q4 earnings slightly missed estimates with gross margin down quarter-over-quarter, the firm tells investors in a research note. KGI says the shares “lack near term catalysts” but that it sees “bargain hunting opportunities” in the next three quarters. The firm believes Tesla’s research and development investments and ramp up of next-generation vehicles could weigh on its gross margin recovery before the second half of 2025.
Meanwhile, Edward Jones downgraded Tesla to Hold from Buy and removed the stock from the firm’s “Stock Focus List” following the company’s recent earnings report and guidance. Increasing competition has pressured demand and consumer interest in electric vehicles has moderated, which has led to overall pricing pressures and reduced operating profitability for Tesla, the firm tells investors. Tesla’s next-generation EV, a mass-market vehicle which could improve sales volumes, isn’t expected to launch until late 2025 and Edward Jones feels earnings growth will slow over the next two years, so it is reducing its growth estimate to 20% from 30%.
Tesla will recall roughly 200,000 vehicles because of a software issue that can prevent rearview cameras from functioning properly, NBC News’ Rob Wile reports, citing a document from the National Highway Traffic Safety Administration. Vehicles covered in the recall include 2023 Model S, X, and Y cars, the author notes. The car maker said it released an over-the-air software update for free, the author says.
Click here to check out Tesla’s recent Media Buzz Sentiment as measured by TipRanks.
BULLISH ON NIKOLA:
Baird initiated coverage of Nikola (NKLA) with an Outperform rating. The firm sees “significant potential” in the market for zero-emissions trucking and believes Nikola “has finally found the right management team to capitalize on the opportunity.” The company’s proprietary design and software are key differentiators versus traditional diesel trucks, says Baird, which sees potential catalysts ahead for both the truck and energy businesses in the form of manufacturing improvements, customer and partnership announcements, and hydrogen infrastructure buildout.
BEARISH ON PLUG POWER:
BMO Capital downgraded Plug Power (PLUG) to Underperform from Market Perform. Plug announced submission of final term sheet for approval of $1.6B conditional Department of Energy loan guaranty and long-delayed Georgia hydrogen plant commenced liquid H2 production, the firm tells investors in a research note. However, BMO sees an “increasingly arduous path” between now and when and if DOE funding flows. Furthermore, even with $1.6B in DOE funding, the firm is skeptical of value accretion of Plug Power’s additional hydrogen plants.
Truist upgraded Enphase Energy (ENPH) to Buy from Hold. While the firm anticipates the company’s sales guidance for Q1 could come in below Street estimates, it also believes buy-side estimates for Enphase are meaningfully below consensus. Truist is incrementally positive on Enphase’s ability to hold its leading margin structure amidst the residential solar downturn following the company’s December 2023 workforce reduction announcement. The firm expects positive market commentary from management could drive a positive share reaction following the Q4 print.
SELL BLOOM ENERGY:
BofA downgraded Bloom Energy (BE) to Underperform from Neutral, with an expectation that 2023-2025 revenues will be about flat versus accelerating previously. The firm has not seen evidence of the anticipated commercial successes during the pivotal period of the years and a reset of expectations is “not priced in.”
Originally Posted January 29, 2024 – What You Missed This Week in EVs and Clean Energy
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