Tesla Inc (TSLA, Financial) experienced a decline of 3.51% in its share price today, closing at $263.53. This drop comes amid concerns regarding higher-than-expected inflation as indicated by the Personal Consumption Expenditures index, and a revised price target by Deutsche Bank.
The Personal Consumption Expenditures index, a key measure of inflation, increased by 0.4% from the previous month and rose 2.8% year over year, surpassing estimates and causing market-wide apprehension. Additionally, Edison Yu, an analyst from Deutsche Bank, maintained his buy rating on Tesla but adjusted his price target, decreasing it from $420 to $355.
Yu has adjusted his projections for Tesla’s first-quarter deliveries, reducing the forecast from 378,000 to a range of 340,000 to 350,000 units. This represents an 11% decrease compared to the previous year, marking the lowest delivery figures since 2022. For the full year, Yu projects deliveries will reach 1.7 million units, reflecting a 5% decline year over year. He attributes these decreases to challenges in Europe and the transition related to the Model Y Juniper.
In terms of Tesla's financial analysis, the company shows strong financial strength with a price-to-earnings (P/E) ratio of 129.18 and a price-to-book (P/B) ratio of 11.62. Tesla's market capitalization stands at approximately $847.65 billion. Despite its challenges, Tesla scores 90 on the GuruFocus scorecard, indicating it is "Fairly Valued" with a GF Value of $259.07. This suggests that the stock is close to its intrinsic value but market conditions continue to shape its volatility.
Moreover, Tesla's operating margin is expanding, which is typically a positive indicator for investors. However, some warning signs include the company's revenue growth slowing down over the past 12 months and continued issuance of new debt. Despite these challenges, Tesla's strong financial position and its strategic focus on expanding its product line and transitioning to more affordable vehicles could potentially yield long-term benefits.
