Analysts Slash Targets on Tesla, Rivian Before Earnings

Key Takeaway

• Analysts cut price targets on Tesla, Rivian, and others ahead of earnings, signaling market caution.
• Tesla's downgrade reflects concerns over slowing EV sales and workforce cuts; Lufthansa adjusts after strike losses.
• GE Vernova receives positive outlook from Raymond James for its potential in decarbonizing power and grid modernization.

Analysts Adjust Price Targets

In recent market movements, analysts have revised their price targets on a diverse group of global stocks, signaling a cautious outlook ahead of the upcoming earnings season. The adjustments span across various sectors, including automotive, pharmaceuticals, energy, aerospace, and fast food. Notably, companies such as Tesla, Rivian, Aptiv, Biogen, Novartis, EQT Corp, TotalEnergies, Deutsche Lufthansa, Boeing, and McDonald’s have seen changes in their price expectations. These revisions come as the market anticipates the first-quarter earnings reports, with a particular focus on how these companies navigate current economic challenges.

Tesla Faces Headwinds

Tesla, the electric vehicle giant, has experienced a notable downgrade in its 12-month price targets by analysts from 15 firms. This adjustment reflects concerns over a global slowdown in electric vehicle sales and the company's decision to cut more than 10% of its global workforce to reduce costs. Barclays, among other firms, has expressed apprehension about Tesla's near-term fundamentals and the potential impact of its first-quarter earnings report. Analyst Dan Levy from Barclays highlighted the possibility of Tesla missing Wall Street expectations, with a particular emphasis on gross profit margins and free cash flow. This sentiment underscores the broader challenges Tesla faces, including slowing demand and increasing competition, particularly in China.

Lufthansa Navigates Strike Impact

Deutsche Lufthansa AG has also been in the spotlight after revealing an expected loss of at least 350 million euros due to strike actions in the first quarter. Despite resolving labor disputes with a pay raise agreement, the airline has seen its profit estimates trimmed. Analysts at Stifel Nicholas have adjusted their price target, albeit maintaining a bullish stance on the stock. This situation illustrates the ongoing challenges airlines face in managing labor relations and operational disruptions, which can significantly impact financial performance.

GE Vernova Enters the Market

On a different note, GE Vernova, recently spun off from General Electric, has garnered attention with a positive outlook from Raymond James. The analyst firm initiated coverage with an outperform rating, citing the company's potential in decarbonizing electric power and modernizing the grid. This optimism is based on Vernova's involvement across a broad spectrum of conventional and renewable generation, as well as grid technology. However, the analyst also noted a preference for the Wind and Electrification segments over the Power segment due to its fossil fuel overweight. GE Vernova's market debut and subsequent performance will be closely watched as it navigates the evolving energy landscape.

Street Views

• Barclays Analyst for Tesla (Bearish on Tesla):

  "Tesla’s deeply challenged near-term fundamentals are taking the backseat to a much larger issue, as Tesla is facing an investment thesis pivot. We expect the 1Q print to be a negative catalyst for Tesla stock for several reasons."

• Stifel Analysts Johannes Braun and Marc Zeck (Bullish on Deutsche Lufthansa):

  "We note that the root cause of the profit warning (i.e., the labour disputes) has now been solved. In fact, all major German labour groups (pilots, cabin, ground) have settled their wage disputes with 2-3 years duration, eliminating major strike risks for the foreseeable future (albeit some smaller labour disputes remain: AUA, Discovery, Cityline)."

Management Quotes

• Elon Musk, CEO of Tesla:

  "The company is eliminating more than 10% of its global workforce to cut costs."