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Investing.com - HSBC has reiterated its Reduce rating and $120.00 price target on Tesla (NASDAQ:TSLA) following the company’s third consecutive quarterly miss of consensus EBIT expectations. According to InvestingPro data, five analysts have recently revised their earnings estimates downward, with the stock currently trading at a P/E ratio of 158.5x.
The research firm noted that Tesla has missed earnings expectations in 11 out of the last 12 quarters, with management warning of additional challenging quarters ahead due to increasing US tariff headwinds and the end of US incentives for electric vehicles and residential battery storage.
Tesla faced a $300 million tariff impact in Q2, according to HSBC’s analysis, while the company’s planned more affordable model is expected to launch later and ramp up production more slowly than previously guided.
HSBC identified several structural issues affecting Tesla’s automotive business, including an aging product portfolio, increasing competition, and brand challenges that continue to impact sales volumes.
As a result of these factors, HSBC has lowered its operating profit forecasts for Tesla by 27% for fiscal year 2025 and 23% for fiscal year 2026, with the new estimates approximately 66% below where they were a year ago.
In other recent news, Tesla reported second-quarter revenue of $22.5 billion for 2025, slightly below Benchmark’s estimate but surpassing the consensus forecast. The company achieved a gross margin of 17%, exceeding expectations from both Benchmark and consensus estimates. Cantor Fitzgerald maintained its Overweight rating on Tesla, noting that while revenue and gross margins exceeded expectations, free cash flow missed consensus estimates by approximately $200 million. Tesla did not provide updates on its annual guidance or details on its robotaxi fleet expansion plans.
Benchmark maintained its Buy rating with a $475 price target on Tesla following the earnings report. Oppenheimer reiterated its Perform rating, highlighting better-than-expected automotive gross margins and Tesla’s focus on autonomous and AI technologies. In a strategic move, Tesla has partnered with Sunrun (NASDAQ:RUN) to offer a home energy solution in Texas, aiming to provide lower electricity rates and backup power. Additionally, Tesla lowered its capital expenditure forecast for 2025 to above $9 billion, falling short of the average analyst estimate of $10.16 billion.
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