Credit Suisse analyst Dan Levy increased the price target from $1,025.00 to $1,125.00 on Tesla (NASDAQ):

Levy believes Tesla will beat the consensus Q1EPS of $2.26. His predictions are at $2.56. Levy also stated that investors will continue to be focused on margins despite rising costs.

These are the three main themes of Q1’s EPS:

1) Berlin and Austin increase volume, while managing expectations for ramp.

2) Shanghai Shutdown to Dampen 2Q Ests. The core reason for a reduced delivery outlook

1) The 1Q print has a significant focus on the gross margin.

Levy says that deliveries from Berlin and Austin factories are a “key positive,” although the recent shutdown in Shanghai dampens the 2022 outlook.

“We estimate 90k units lost in 2Q alone. And combined with a more conservative outlook on the ramp in Berlin and Austin, we reduce our ’22 delivery forecast to 1.42mn units (a ~100k unit cut). The Shanghai restart cadence + the Berlin/Austin ramp add an element of uncertainty to ’22 deliveries,” Levy said in a client note.

Furthermore, Tesla stock will be affected by negative remarks about margins.

“We expect significant focus on gross margin in the 1Q print – we forecast gross margin ex. credits of 26.6%, -260bp q/q, and a reversal from Tesla’s recent run of lofty margins, driven by cost inflation and production inefficiencies, more than offsetting favorable mix and price. While we think price increases will help to blunt the impact of cost inflation in 2022, we nevertheless expect a net negative, especially given the timing lag of price increases,” the analyst added.

Tesla stock closed yesterday at $1,004.29

By Senad Karaahmetovic