After struggling badly amid worrying sector trends, electric vehicle (EV) manufacturer Tesla (NASDAQ:TSLA) saw its shares shoot higher. In particular, Wedbush Securities analyst Dan Ives saw Tesla CEO Elon Musk rising to meet the challenges facing the industry. While the long-term narrative remains encouraging, Ives nevertheless trimmed the price target of TSLA stock.
On Tuesday, Tesla reported its first-quarter earnings report. The print itself left much to be desired. Per CNBC, the company’s sales of $21.3 billion represented a 9% decline on a year-over-year basis. Further, the tally missed the analysts’ consensus target of $22.15 billion. On the bottom line, the company’s adjusted earnings per share came out to 45 cents. However, analysts were looking for an EPS of 51 cents.
As if that wasn’t enough, the EV manufacturer’s shareholder deck reiterated a downbeat projection for the current year. Management noted that the “volume growth rate may be notably lower than the growth rate achieved in 2023.”
Still, Ives expressed optimism for the long-term narrative of TSLA stock. In particular, the analyst believes that Musk is becoming the “adult in the room.” Gone was the strange behavior of past Tesla earnings calls. Instead, the CEO provided a vision for the future, undergirded by a lower-cost vehicle that should hit a 2025 production and delivery window.
Mitigated Optimism Drives TSLA Stock
Ives further emphasized the forward potential of TSLA stock, noting new innovations in smart mobility. “We believe the next wave of the Tesla growth story and autonomous vision is now forming and that is what we are focused on for our bullish investment thesis looking ahead,” the market expert stated in a note to investors Wednesday.
However, the analyst doesn’t wear rose-tinted glasses. Instead, Ives acknowledges that despite the positive strategic vision, TSLA stock is encountering a “Category 5 storm.” This colorful assessment includes weak sector demand and growing competition, with a wary eye on Chinese EV rivals. As well, Ives characterized Tesla’s Q1 report as a “disaster.”
Notably, Wedbush maintained its “outperform” rating on TSLA stock. However, the investment firm lowered the price target to $275 from $300. Against Tuesday’s closing price, the downgraded target still implies a 90% upside potential.
Moving forward, one of the main concerns for TSLA stock is the viability of the lower-priced EV model. Essentially, it’s the same strategy of Tesla’s initial price war. And while the company’s announcement put pressure on Rivian (NASDAQ:RIVN), it remains to be seen if it can dislodge Toyota (NYSE:TM).
As the EV sector encountered its troubles, Toyota pushed its hybrid vehicles to resounding success.
Why It Matters
While Wedbush remains bullish on TSLA stock, the overall analyst view is measured as a consensus hold. This assessment breaks down as eight buys, 19 holds and eight sells. Overall, the average price target comes in at $177.30, implying a 10% upside potential.
On the date of publication, Josh Enomoto 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.
