Deutsche Bank Adds Tesla to Short-Term "Buy" List

Emmanuel Rosner put Tesla to Deutsche Bank's "Catalyst Call: Buy" list ahead of Q2 Earnings on July 20. Deutsche Bank expects the U.S. manufacturer to maintain its annual delivery target of 1.4 million units by 2021.

We are adding Tesla to our short-term Catalyst Call Buy List ahead of the company's 2Q22 earnings day on July 20th, when the company could report upside to low Street expectations for 2Q margins, driven by good cost execution and continued pricing strength. 

We expect management to reiterate its full year deliveries growth of 50%, suggesting total volume of approximately 1.4m units and implying considerable volume ramp in the second half.

“We believe the Street's anticipated sequential profit deterioration of >$1.5B more than captures the large headwinds faced in the quarter,” the analyst wrote.

"We think the stock's 30%+ YTD pullback reflects supply concerns that are improving, creating a compelling opportunity to accumulate the stock into 2H and 2023 where volume growth and margin expansion could be considerable." 

Even if 2Q margins disappoint, investors should take advantage of the stock pull-back to get involved because margin pressure is transient and long-term operating leverage remains intact, he said.

Last Monday, Credit Suisse analyst Dan Levy confirmed the firm's $1,000 price objective on Tesla and Outperform rating, saying the GigaShanghai outage will hurt Q2 margin but expects a margin recovery in the second half as Tesla ramps up production.

Tesla delivered 254,695 vehicles in the second quarter, down from 310,048 in the first. June was the company's most productive month ever.

“Despite supply chain issues and production shutdowns, we manufactured and delivered over 258,000 vehicles in the second quarter. Tesla said June 2022 was its most productive month ever.