On Tuesday, Morgan Stanley maintained its Overweight rating on shares of Tesla (NASDAQ:TSLA) with a price target of $310.00, citing the company's impressive second-quarter delivery numbers and significant working capital inflow from inventory reduction.
Tesla's second-quarter deliveries exceeded expectations, reaching 443,956 units compared to Morgan Stanley's estimate of 427,303 and the consensus forecast of 437,812. This delivery beat is noted as one of the few positive surprises for Tesla this year.
The electric vehicle manufacturer also saw a substantial reduction in inventory, delivering 33,000 more units than it produced in the second quarter, which led to a $1.5 billion boost to working capital. This figure surpassed Morgan Stanley's expectations, suggesting that the firm's forecast of a $0.9 billion free cash flow (FCF) burn for the quarter may be more conservative than necessary.
Tesla's energy storage deployments also impressed, with the company posting a record high of 9.4 GWh for the quarter, nearly doubling Morgan Stanley's forecast. The analyst highlighted the potential for Tesla Energy to benefit from increased investment in the U.S. electric grid, spurred by advances in AI technology.
The report also reflects a shift in investor sentiment. Just a few weeks ago, concerns were raised about a potential rejection of CEO Elon Musk's 2018 compensation package, which could have led to a management and strategy overhaul.
Still, following the positive developments in the second quarter, investors are now inquiring about potential catalysts for Tesla's upcoming quarterly results and expressing interest in Morgan Stanley's proprietary models for Tesla Energy and their humanoid robot total addressable market (TAM).
In other recent news, Tesla has been in the spotlight with its second-quarter vehicle deliveries exceeding market expectations. The company delivered a total of 443,956 units, a 14.8% increase from the first quarter. This is largely attributed to pricing adjustments that stimulated customer demand. However, Tesla's sales of electric vehicles manufactured in China experienced a significant 24.2% decline year-over-year in June.
RBC Capital and Citi have maintained their respective ratings for Tesla, with RBC maintaining an Outperform rating and a $227.00 price target, and Citi retaining a Neutral rating with a steady price target of $182.00. Both firms anticipate a favorable reaction in Tesla's stock price following the delivery and production report.
In other recent developments, Tesla's exceptional performance in Energy Storage during the second quarter of 2024 was highlighted, indicating potential market share gains.
Meanwhile, electric vehicle manufacturer Polestar (NASDAQ:PSNY) reported a first-quarter operating loss of $231.7 million due to significant tariffs on its China-produced EVs. The company plans to adjust its production strategy to lessen its dependency on Chinese manufacturing.
On the other hand, Chinese automaker BYD (SZ:002594) reported a substantial 21% increase in its EV sales for the second quarter, signaling a tightening race with Tesla. These are some of the recent developments in the EV sector.
InvestingPro Insights
As Tesla (NASDAQ:TSLA) continues to impress with its second-quarter delivery numbers and working capital efficiency, Morgan Stanley maintains a bullish stance. For investors seeking a deeper financial understanding, InvestingPro provides real-time data and insights. Tesla's substantial market capitalization of $731.06 billion underscores its significant presence in the industry.
Despite a high P/E ratio of 53.37, reflecting investor optimism, the company's P/E ratio has remained relatively stable with an adjusted P/E of 53.44 for the last twelve months as of Q1 2024. Moreover, Tesla's revenue growth of 10.12% over the last twelve months signals a strong demand for its electric vehicles, even as quarterly revenue growth shows a decline of 8.69% in Q1 2024.
From an investment standpoint, two InvestingPro Tips suggest caution: analysts have revised earnings expectations downwards for the upcoming period, and the stock's RSI indicates it may be in overbought territory. Nevertheless, Tesla's significant role in the Automobiles industry cannot be overlooked, and its status as a prominent player is further reinforced by strong return metrics over the last week, month, and three months.
For those interested in more comprehensive analysis, InvestingPro offers an additional 21 tips for Tesla, which can be accessed with the promo code PRONEWS24 for up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.