Why Did Piper Sandler Slash Its Price Target on TSLA Stock?

  • A Piper Sandler analyst cut his price target on Tesla (NASDAQ:TSLA) stock to $1,035
  • This is because he expects its second-quarter earnings to disappoint
  • Even bearish predictions shouldn’t worry investors, though
TSLA stock: Tesla Super Charging station on Stockdale Hwy and the 5 fwy. Tesla Supercharger stations allow Tesla cars to be fast-charged at the network within an hour.
Source: Sheila Fitzgerald / Shutterstock.com

Piper Sandler analyst Alexander Potter expects Tesla (NASDAQ:TSLA) to report weaker-than-expected earnings for the second quarter of 2022. With this in mind, he cut his price target on shares from $1,260 to $1,035. The analyst maintained his “buy” rating.

In a note to investors, Potter said he doesn’t expect TSLA stock’s previous growth trends to continue. He stated that Tesla’s “operational prowess was on full display in Q1 but key financial metrics will probably deteriorate” in Q2. He foresees the new factories in Germany and Texas being a “drag on margins” while also accounting for lockdowns in Shanghai in his forecast.

As he sees it, the stock could move sideways or continue falling, hence his lowered price target.

Potter isn’t completely bearish on TSLA stock, though. He added that “any share weakness may prompt new buyers because downside due to temporary factors will not detract from the longer-term thesis.”

Other analysts have issued similar takes on Tesla. Three days ago, Toni Sacconaghi of Bernstein noted that while Tesla remains the EV market’s most dominant global player, it also lost some of its market share in 2021. Sacconaghi gave Tesla an “underperform” rating and a highly bearish price target of $450.

TipRanks’ analyst consensus puts TSLA stock at a “moderate buy.” The average 12-month price target on shares is $967.36.

The Road Ahead for TSLA Stock

The concerns Potter and Sacconaghi issued are not new. It’s true that competition for Tesla has been rising and that the company has faced production constraints all year.

What investors should take from that, though, is that Tesla is a difficult company to hold back. The company’s most recent earnings report blew past Wall Street expectations.

While the Shanghai shutdowns have also not been ideal, the company is working hard to return to previous production levels. Experts are still waiting to see if the Shanghai factory does come “back with a vengeance” as Elon Musk predicted. What experts do know is that EV demand is still rising. The company will keep working hard to supply electric vehicles and TSLA stock will keep rising.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.

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