Citi auto analyst Itay Michaeli points to strong Q4 trends in boosting price targets and earnings estimates on three automakers, whilekeeping ratings the same.
Michaeli still has a Sell rating on Tesla(NASDAQ:TSLA), but raises the price target to $262 per share from $236. EPS estimates for the next fiscal year are $9.20 from $7.87.
"Despite some known near-term margin headwinds (new capacity ramping, supply-chain/commodities), we believe that EV supply/demand will remain strong enough to continue driving YoY margin expansion, particularly in the U.S., where Tesla’s share is strongest," he writes in a note.
"Our Sell rating reflects our view of risk/reward at the current valuation, which we believe embeds expectations for Tesla selling ~20mln units by ~2030, an implied market share outcome that is not supported by our prior market analysis, and a clear lead in AV/FSD revenue pools (RoboTaxi, subscriptions/sharing), which our latest AV industry assessment does not support."
If "we look at the time when a handful of other companies neared Tesla’s current market cap, they did so generating ~8x more gross profit (on average) than Tesla’s current 2021 consensus and ~3x more than Tesla’s 2025 consensus," he adds.
General Motors(NYSE:GM) keeps its Buy rating with the target moving to $96 from $90. EPS estimates rise to $7.01 from $6.76.
"GM remains our top pick, with a long-term upside case to ~$200/share," he says. "Though the shares have underperformed since the recent departure of Cruise’s CEO, we still view GM’s upcoming CES EV unveilings as a likely positive catalyst for the stock."
Ford(NYSE:F) stays at Neutral. The price target goes to $23 from $20 and EPS estimates for the next fiscal year go up to $2.01 from $1.90.
"We continue to see greater relative upside at GM, but we maintain a constructive stance on Ford, as the long-term risk/reward proposition continues to improve."