Tesla Stock Forecast as Analysts Turn Bullish Ahead of Earnings

Tesla stock has remained in a tight range in the past few days, but this could be the calm before the storm as the company publishes its financial results on July 22. It was trading at $394 today, July 14, down by 20% from its highest point this year.

Analysts have turned bullish on Tesla stock ahead of earnings

Top analysts tracking Tesla’s shares have become a bit bullish on the company after releasing its second-quarter deliveries report. The report showed that the company made 451,758 vehicles in Q2 and delivered 480,126. This delivery figure was much higher than what analysts were expecting.

According to research notes from Jefferies, UBS, and RBC Capital Markets, analysts Philippe Houchois, Joseph Spak, and Tom Narayan raised their Tesla price targets following the company’s second-quarter delivery report. Joseph Spak, a UBS analyst, hiked the target to $442 from the previous $364, while RBC’s Tom Narayan boosted the target from $475 to $500.

As a result, the consensus target for the stock is $407.58, a few points above $404.3, where it was a month ago.

More data shows that analysts have boosted their earnings expectations. The average target among analysts is that the company’s revenue jumped by 14.8% to $25.83 billion. The earnings per share are expected to jump to $0.50 from the previous $0.4. A month ago, the average EPS estimate was $0.45.

Tesla has likely benefited from the relatively strong consumer sentiment in the United States as gasoline prices jumped.

Tesla is Facing Some Major Challenges

However, the main challenge Tesla is facing is the rising capital expenditure trends. The company, together with SpaceX, are spending billions of dollars in Terafab, a massive semiconductor manufacturing plant in Texas. In the last earnings statement, the company suggested that it will have a negative cash outflow this year because of this spending.

Tesla is also seeing strong competition in key markets like Europe and China. China, a key market, has had some saturation, with companies like Nio, BYD, XPeng, and Li Auto competing for share. A report released today showed that China’s EV companies exported over 1 million in June this year.

Tesla also faces some other challenges. A key one is the humanoid business, which it is spending substantial sums of money on. It has started making a limited number of its Optimus robot in California, with Elon Musk saying that it will be the “biggest product of all time”.

While Optimus may become a big business, the reality is that it is a new product that faces competition from other companies like ABB, Figure AI, and Boston Dynamics.

Historically, some top companies have launched products that flopped. Tesla itself spent billions of dollars launching its Cybertruck, whose sales have plunged over time.

Additionally, the company’s valuation is still stretched for a company that is no longer growing as it did in the past. Its forward price-to-earnings ratio jumped to 294, much higher than other top companies in the US, including fast-growing names like Nvidia and AMD.

Tesla Stock Price Technical Analysis

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Stock markets are volatile, and investors should conduct their own research and consider their financial circumstances before making investment decisions.

The daily chart shows that the TSLA stock price has remained in a tight range in the past few days. It has remained above the ascending trendline that connects the lowest swings since April this year. It sits above the Major S/R pivot point of the Murrey Math Lines.

The stock is consolidating at the 100-day Exponential Moving Average (EMA). There are also signs that it has formed an inverted head-and-shoulders pattern.

The chart suggests the stock could attempt a move toward the $440 resistance level if earnings and guidance exceed market expectations. A weak earnings report could instead send shares back toward the rising trendline.