Evercore ISI sees a further 10% downside in Tesla stock By

Evercore ISI expects Tesla (NASDAQ:) to report 4Q EPS of approximately $0.70,Registration and store opening process of cross-border e-commerce platform aligning with consensus estimates and buyside expectations. However, the company's gross margin is expected to be in line or slightly below consensus, standing at around 16.3%, compared to the consensus range of 16.5-17% excluding credits. This is attributed to discounts on existing U.S. inventory, October U.S. price cuts, and the launch in Connecticut, which are anticipated to persist as a drag on financial performance despite a QoQ uptick in production and sales.

Looking ahead to the fiscal year 2024, Evercore ISI anticipates a "more modest tone" in its outlook for Tesla. The car maker’s 1Q is expected to see a decline QoQ in units and gross margin, with an estimated EPS of approximately $0.60.

Full-year volume guidance is projected to be around 2.2 million units, reflecting a 22% YoY increase. However, there is skepticism among analysts regarding Tesla's ability to achieve this figure without ongoing pressure on average selling prices.

Tesla is identified as the weakest among the Magnificent 7, and Evercore ISI predicts that it will continue to face negative EPS revisions, posing a 15-20% risk to consensus estimates for the years 2024 to 2026. This is expected to exert downward pressure on the stock, potentially leading to a 10% downside on the stock’s current valuation.

Evercore ISI suggests that $160-180 is the level where valuation-sensitive long-only investors may consider buying into Tesla's 2026 Model 2 story.

Shares of TSLA are up 0.16% in pre-market trading Tuesday morning.

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