Tesla Inc. is well-established in both the short and long term, according to an analyst at RBC Capital Markets, which has just returned to bullish with equities amid its “favorable” position.
RBC’s Joseph Spak updated the vehicle manufacturer’s TSLA stock,
to outperform the industry on Sunday afternoon, writing the company’s “most favorable short-term configuration,” as well as its expectation that “Tesla’s focus on supply chain and vertical integration will be a competitive advantage.” in the medium term “.
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Spak wrote that consensus expectations call for 279,000 Tesla deliveries in the second quarter, though he said he set purchase estimates at 250,000 and his own forecast is 249,000 deliveries. However, he acknowledged that there could be room for improvement “if the reports that the Shanghai Tesla facility has returned to full speed are correct,” depending on Tesla’s ability to obtain additional produced vehicles. .
In addition, he noted the possibility of increasing the margin in the second quarter, as well as later in the year. While Tesla is expected to deliver fewer units than it did in the first quarter, Spak wrote that the company could see an increase of about 3% in average selling prices “given the price action that Tesla took some time ago, but couldn’t figure out how they’ve been working with their delay. “
Looking to the second half of the year, Spak wrote that Tesla could offer gross car margins at around 30%, while the consensus view is about 28%, “as Shanghai returns to the pace, Berlin and Texas are on the rise and prices are on the rise.
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As for Tesla’s long-term narrative, Spak is “increasingly in favor of positioning Tesla’s industry.” The company has benefited from an “oligopoly-like positioning” so far and is likely to lose share in electric vehicles once competitors increase their bids, but is not too concerned about boosting demand from Tesla and its opportunity to benefit from price movements.
More critically, however, Spak believes that Tesla has a key advantage over its rivals when it comes to supply chain issues.
“While TSLA is quite secretive about the deals they have cut for the supply of raw materials, speaking to the contacts we believe they have done more than other OEMs. [original equipment manufacturers]”The company’s early focus on vertical integration (not only batteries / raw materials, but also engines, semis, software) is likely to pay off.”
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“TSLA’s earnings and cash generation over the next few years, as well as its ability to use its shares as currency, can help them build and secure materials, giving them a strong competitive advantage.” , Spak pointed out.
Spak lowered its Tesla share price target to $ 1,100 from $ 1,175 on its customer note.
Shares are down about 4% on pre-market trading on Monday. It has fallen 34.1% so far this Friday, while the S&P 500 SPX index,
it has fallen by 18.2%.