Wells Fargo analyst Colin Langan maintained Tesla Inc (NASDAQ:TSLA) with an Equal-Weight and cut the price target from $280 to $230.
As TSLA will report Q3 EPS post-close on October 19, he forecasts a slight Q3 beat as forex headwinds offset pricing benefits.
The Q3 likely focuses on IRA & demand, and TSLA will probably be the biggest IRA beneficiary. Therefore, the analyst raised his 2023-26 EPS by ~33% to reflect IRA benefits.
Langan expected ~$3.1K/vehicle benefit from production tax credits for any U.S.-made battery, driving $2.8 billion in savings if TSLA maxes its ~900K U.S. footprint.
The analyst writes that $3.75K in retail EV buyer credits serve as an effective 4-7% price cut for most TSLA buyers, which should drive higher volume.
The benefit as timely as filling the close to 2 million units of global capacity will still be challenging at the current >$47K U.S. price point.
The U.S. Model 3 has been available for >5 years & the Model Y for 2.5 years.
The analyst price target reflects the output of his 3-stage DCF analysis of the core auto business, assuming a 13% WACC, 25% 5-10 year growth, 20% 11-15 year growth, and a 10% terminal growth rate.
Langan also included $11 billion in value associated with solar and storage, insurance, and an option on the autonomous ride-share business.
Price Action: TSLA shares traded lower by 3.87% at $213.14 on the last check Friday.
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