Deutsche Bank: Tesla's profit in 2024 faces "significant downside risk", target price lowered to $285.

According to Dolphin Research APP, Deutsche Bank reiterated its "buy" rating on Tesla (TSLA.US) stock on Wednesday, but lowered its target price from $300 to $285. The bank warned that the profitability of the electric car manufacturer will face "strong headwinds" in 2024, largely due to dim prospects for production next year.

The bank's analysts expect Tesla's deliveries in the third quarter to reach 440,000 vehicles, lower than the Wall Street consensus expectation of 455,000 vehicles. Deutsche Bank predicts that this could result in the bank's quarterly revenue falling from the previous expectation of $24.1 billion to $23.3 billion. Meanwhile, the bank stated that earnings per share could drop to $0.71, lower than the Wall Street consensus expectation of $0.87.

Deutsche Bank analysts wrote, "However, looking ahead to 2024, we believe there is significant downside risk to profit expectations as sales prospects are far below market expectations."

They pointed out that Tesla stated at an investor conference that it no longer plans to increase production at its Austin and Berlin factories to 10,000 vehicles per week next year. The bank has lowered its production expectations for Tesla in 2024 to 2.1 million vehicles, lower than the market's general expectation of 2.3 million vehicles.

However, on the positive side, the pricing pressure Tesla will face next year may ease, and its car prices may decrease slightly by 1%. The bank predicts earnings per share of $3.90 in 2024, lower than the general expectation of $4.76. Deutsche Bank added that the next generation of electric vehicle platforms will be key to further growth in Tesla's performance, and investors are closely watching the launch time of the next generation of vehicles.

Deutsche Bank analysts wrote, "After 2024, everyone's attention is focused on Tesla's next-generation platform. However, in our view, keeping the timetable expectation at 2025 is crucial, as investors need to overlook the weak 2024 and see it as a transitional rather than a growth year."

Tesla's stock price has experienced strong growth in 2023. Driven by Wall Street's optimism about artificial intelligence and enthusiasm for investing in high-growth stocks, Tesla's stock price rebounded from a dismal decline in 2022. On Wednesday, Tesla's stock price closed near $240, up about 100% year-to-date.