By Claudia Assis
Tesla Inc. is expected to report fourth-quarter results after the bell on Wednesday, with all eyes on the Silicon Valley electric-car maker’s sales goals for 2021.
On a call in October to discuss Tesla’s third-quarter earnings, one analyst estimated 2021 sales between 840,000 to 1 million vehicles, and Chief Executive Elon Musk responded that it likely would be “in that vicinity,” and that the analyst was “not far off.”
Chief Financial Officer Zach Kirkhorn then added that Tesla (NAS:TSLA) would provide official 2021 guidance when it reports fourth-quarter results, seemingly preventing Musk from saying more.
All through last year, despite factory closures and other pandemic-related snags, Tesla kept its 2020 sales guidance intact, and the company ended the year a hair’s breath from it, earning praise from Wall Street.
Tesla earlier this month said it had produced more than half a million vehicles and delivered 499,550 in 2020. Deliveries are a proxy for Tesla sales. Before the start of the pandemic, the company set a goal of delivering more than 500,000 vehicles in the year.
Wall Street analysts expect a deliveries guidance to come in around 825,000 and 875,000 vehicles.
Here’s what else to expect:
Earnings: Consensus from 37 Wall Street analysts polled by FactSet calls for GAAP earnings of 72 cents a share, which would compare with GAAP earnings of 12 cents a share in the fourth quarter of 2019.
The analysts expect an adjusted profit of $1.02 a share, which would compare with an adjusted profit of 43 cents a share a year ago. A fourth-quarter profit would be Tesla’s sixth straight quarterly GAAP and adjusted earnings.
Estimize, a crowdsourcing platform that gathers estimates from Wall Street analysts as well as buy-side analysts, fund managers, company executives, academics and others, is expecting an adjusted profit of $1.10 a share.
Revenue: The analysts surveyed by FactSet expect sales of $10.47 billion for Tesla, up from $7.38 billion a year ago. Estimize sees revenue of $10.67 billion for the company.
Stock movement: Tesla stock greeted 2021 just about the same way it ended 2020: Scoring closing and intraday records highs. Earlier this month, the stock went on its longest-ever winning run.
Tesla shares are up 688% in the past 12 months, compared with gains around 17% for the S&P 500 index (S&P:SPX) in the same period.
What else to expect: Full-year results will provide the clearest yet picture of the coronavirus pandemic impact on the company.
Besides an official 2021 sales guidance, Wall Street is looking for more commentary on the Model Y, the newest addition to the Tesla lineup, and on upcoming models, such as the Cybertruck and a cheaper vehicle that has been only hinted at and that has been dubbed the “Model 2.”
Today’s surprise could come from an upside in gross margins, Joseph Osha at JMP Securities said in a note Wednesday.
“Production volume increased significantly again in 4Q, and (Tesla) is reaping the benefits of full factories in Shanghai and California, while likely not yet absorbing overhead from Berlin,” he said. Moreover, Tesla has surprised Wall Street “several times now with upside from vehicle emission credit sales, and that could happen again.”
Analysts at JPMorgan said Friday they remained “highly cautious” on Tesla due to its stock valuation, but they raised their price target on the stock to $125 from $105, the lowest among FactSet-surveyed analysts.
“While still suggestive of large downside, we do not regard our price target as ungenerous as it actually values Tesla as the world’s second largest automaker by market capitalization, behind Toyota and ahead of Volkswagen despite these automakers each currently selling on the order of magnitude of 20x as many vehicles annually as Tesla,” the JPMorgan analysts, led by Ryan Brinkman, said in their note.
RBC analysts, led by Joseph Spak, said in a recent note they expect Tesla to reiterate its recently raised capex 2021 outlook, which calls for between $4.5 billion and $6 billion.
Tesla historically has issued guidance for free cash flow and GAAP net income, the RBC analysts said, but could hold off on it beyond calling for “significant” on-year improvement.
Deutsche Bank analysts said they expect a “solid” quarter for Tesla, raising their delivery forecast to 825,000 vehicles from 800,000, “given continued strong sales of Model 3 and fast ramp-up of (made-in-China) Model Y.”
The Deutsche Bank analysts, led by Emmanuel Rosner, also raised their price target on Tesla shares to $890 from 705 to $890, based on expectations of higher sales and profits through 2021 and the next few years.
On average, Tesla analysts polled by FactSet have a price target of $525 on Tesla, with 12 out of the 37 with a buy rating on the stock, 15 rating it a hold, and the remaining 10 rating it a sell. The $525 average represents a 40% downside from Monday prices.