The recent price weakness in Tesla Inc. (TSLA) after its latest quarterly report represents a buying opportunity, Argus analysts said in a note issued at the close of trading last week.
Analysts wrote: Despite the company reporting a weaker-than-expected second quarter, we remain supportive of the company's strategy and believe the future outlook remains strong.
Why Tesla Will Rise According to Argus Analysts
One of the main reasons behind her bullish thesis is Tesla's comment about its plans to start producing a new model of low-cost, affordable electric cars, in the price range of $25,000 to $30,000.
We view this development as a positive step forward that will enable Tesla to maintain, and possibly expand, its dominance in electric vehicles.
Argus believes that despite numerous near-term manufacturing and operational challenges, Tesla will be able to overcome these issues and maintain its position as a leader in the electric vehicle market.
They also expect the company to benefit from tax breaks for electric vehicle purchases under the Inflation Reduction Act passed last year, as well as from increased semiconductor supplies and moderating raw material cost inflation.
Although electric vehicle sales have moderated in recent months in both the United States and globally, the investment research firm sees the long-term trend for electric vehicle sales as strong.
Tesla predictions in 2024
In terms of valuation, analysts see Tesla stock as attractive at current levels, stressing that it should not be valued as a regular car company because it encompasses much more than that.
In addition to manufacturing electric cars, Tesla is also dedicated to energy storage, self-driving technology, and advanced robotics, the analysts added.
On July 23, after the closing bell, Tesla reported adjusted net income for the second quarter of 2024 of $1.812 billion, or $0.52 per diluted share, down from $3.148 billion, or $0.91 per diluted share, in the same quarter last year.
Earnings, along with auto margins, came in below expectations, sending the company's shares down 12% in after-hours trading.
Argus lowered its 2024 EPS estimate for Tesla to $2.45 from $2.57, still above the current $2.35 forecast. The company also lowered its 2025 EPS estimate to $3.32 from $3.51 to reflect weaker demand trends in the electric vehicle industry, which we believe is a temporary condition.
