Piper Sandler Lowers Tesla’s PT to $400
Piper Sandler analyst Alexander Potter lowered on April 15, 2025, Tesla’s price target to $400 (from $450). The analyst reiterated an ‘Overweight’ rating on the stock.
“Q1 Will be a Non-Event (at Best) Unless Specifics Emerge re: New Cars & Robo-taxis
Q1 financials will likely underwhelm. Deliveries of 337k units missed consensus (of 378k). and as a result, gross margin is probably trending near multi-year lows.
Plus, it’s hard to rely on new products for delivery growth, because Tesla hasn’t disclosed specifications or pricing for “Model 2.”
We’re cutting our estimates to reflect this outlook, and our price target is now $400, down from $450.
However, while our 2-3 month outlook leans bearish, remember that TSLA can rally sharply whenever “big picture catalysts emerge.
As highlighted on page 2. there are some major catalysts on the horizon (new products and robo-taxis).
Perhaps not on the Q1 call, but eventually, we think TSLA will report good news on these topics. When that day arrives, we wouldn’t want to be underweight
Our updated thoughts ahead of Q1 earnings (scheduled for the afternoon of 4/22)
- No amount of Q1 financial downside is likely to shock investors: expectations are low
- We now expect 2025 and 2026 deliveries of 1.74M units and 2.00M units, respectively
- In our previous model, we had expected deliveries of 1.88M (2025) and 2.3M (2026)
- Curiously, U.S. wait times on the refreshed Model Y haven’t risen (maybe a red flag?)
- New product launches could help offset faltering demand for Tesla’s existing vehicles.
- …but until TSLA discloses more details, it’s hard to defend our forecast for “Model 2”
- We are cutting our EPS estimates, to reflect lower deliveries and a slower margin ramp
- Our PT is now $400, down from $450, due to lower EPS (stil based on 120x FY20 EPS)
- Despite all the negativity, a single robo-taxi headline would likely change the narrative
- Full self-driving (FSD) software accounts for the bulk of our 20-year profit outlook
- Given FSD’s contribution to the terminal value, robo-taxi catalysts have outsized impact
RISKS TO ACHIEVEMENT OF PT & RECOMMENDATION
Production delays, raw material pricing volatility, product defects and recalls, supply chain disruptions, slow adoption of electric vehicles.
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