Wells Fargo Analyst Colin Langan claimed Tesla Inc TSLA with an equal weight and clip the price target $280 to $230.
As TSLA reports 3Q EPS after market close on Oct. 19, it forecasts a slight increase in 3Q as forex headwinds erase price advantage.
Q3 is likely to be IRA and demand focused and TSLA is likely to be the biggest IRA beneficiary. As such, the analyst increased its EPS by ~33% in 2023-26 to reflect IRA benefits.
Langan anticipated a ~$3.1k/vehicle benefit from production tax credits for each battery manufactured in the US, which would result in savings of $2.8 billion if TSLA maximizes its ~900k US footprint.
The analyst writes that $3.75K in retail EV buyer credit represents an effective price reduction of 4% to 7% for most TSLA buyers, which should result in higher volume.
The advantage, which is as timely as filling the nearly 2 million units of global capacity, will still be a challenge at the current price of >$47,000.
The US Model 3 has been around for >5 years and the Model Y for 2.5 years.
The analyst’s target price reflects the outcome of his three-level DCF analysis of the core auto business, with a WACC of 13%, 5-10 year growth of 25%, 11-15 year growth of 20% and a terminal growth rate of 10% are accepted.
Langan also considered an $11 billion value related to solar power and storage, insurance and an option on the autonomous ridesharing business.
Price promotion: TSLA shares traded 3.87% lower at $213.14 on the last check Friday.
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