Analysts are split over where Tesla goes from here after its latest quarterly results

Published Thu, Oct 20 20226:28 AM EDTUpdated Thu, Oct 20 20227:06 AM EDT

Analysts are divided over the near-term and future trajectory of Tesla shares after the electric vehicle company posted mixed third-quarter results. Tesla on Wednesday reported revenue for the period that missed analysts' expectations despite a slight beat on adjusted earnings per share and warned of a potential delivery miss this year. Shares traded about 6% lower in the premarket amid the news. Piper Sandler's Alexander Potter attributed much of the move to the company's gross margins — which came in at 27.9%, slightly below some analysts' expectations. "Lower pricing is likely, in our view, as Tesla expands down-market; but more efficient factories, higher volume, and more software should mitigate the impact on gross margin," he said. Citi's Itay Michaeli agreed with Potter, saying in a note to clients that despite taking an initial leg down, he expects the stock to shift back to trading on near-term macro and industry trends. RBC Capital Markets' Joseph Spak also sees tailwinds from the Inflation Reduction Act to assist the company's margins heading into 2023. Morgan Stanley's analyst Adam Jonas reiterated his overweight rating on the stock, saying in a note to clients he expected an earnings miss from the company as it grapples with cost inflation related to shipping and input costs on supplies like batteries. "A very strong quarter," Jonas wrote. "Still we wish FY23 consensus would allow more room for macro uncertainty." To be sure, not all analysts are convinced of Tesla's near-term investment thesis. Bernstein's Toni Sacconaghi highlighted a slew of demand concerns and worries beyond 2023 over whether the stock offers an attractive risk/reward to long-term investors at its current price. "While we acknowledge Tesla's innovation and financial success, we continue to struggle to justify the company's valuation," he wrote. "TSLA's valuation appears to imply huge volume and industry leading profitability going forward, which is historically unprecedented." The firm's $150 price target on the stock suggests shares can fall more than 32% from Wednesday's close price. Meanwhile, Wells Fargo lowered its 2022 through 2026 estimates to reflect a lower average selling price and maintained its equal weight rating. "Despite the positive 3Q:22 performance, we believe that TSLA stock may already be priced fairly, especially considering market volatility, such that near-term earnings beats may be insufficient to get bulls incrementally positive," wrote Bank of America's John Murphy as he reiterated his neutral rating. Tesla's stock is down about 37% this year and sits more than 46% off its 52-week high. Still, Baird analyst Ben Kallo retained his buy rating on the stock, highlighting in a note to clients that company's continued strong margins and ramp-up of its factories in Texas and Berlin. "TSLA posted strong Q3 results amidst continuing materials shortages and logistics volatility. Cost per vehicle should improve as delivery pace smooths and TSLA shifts to a more even delivery and production mix geographically. TSLA Semi deliveries are scheduled to begin in Q4 with production ramp accelerating in 2023. Setup for Q4 is strong as gigafactory ramp continues in Austin and Berlin. We remain buyers," Kallo said. — CNBC's Michael Bloom contributed reporting