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Morgan Stanley reiterated an Overweight rating and cut the price target on Tesla, Inc. (NASDAQ:TSLA) to $350 (from $383) following the company’s 3Q delivery miss. Morgan Stanley believes the factors that drove to Tesla’s weaker than expected 3Q production and deliveries could continue to present headwinds into 4Q as well as into FY23. Their revised forecast assumes a 3Q23 auto gross margin of 25.0% vs. 26.2% in 2Q. FY23 clean auto gross margin estimates stand at 24.5%.
Morgan Stanley believes that Tesla is passing through peak auto margins right now. Analysts there wrote in a note, “We believe there may be greater room for consensus to appreciate the short-term margin headwinds from ramping up 2 giga-factories on 2 different continents at the same time in the current environment.”
Morgan Stanley remains bullish on the electric vehicle maker as they look forward to Tesla’s Master Plan ‘X’ which is expected to follow shortly after the company’s 3Q results. This most recent iteration of Tesla’s long-term strategy is expected to focus on supply chain re-architecture and significant changes in manufacturing/sourcing/scale.
Shares of TSLA are down 0.12% in mid-day trading on Monday.
