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Wells Fargo cuts Tesla price target, cites rising interest rates

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Expect rising interest rates to weigh on Tesla moving forward, Wells Fargo says. Ahead of third-quarter earnings, analyst Colin Langan trimmed the bank’s price target on the electric vehicle stock to $230 from $280 a share to reflect this headwind, implying a 3.7% potential upside for the stock from Thursday’s close. “While IRA will help in 2023, the economy and interest rates likely will not, particularly in Europe where an energy crisis looms,” Langan wrote. “If consumers are watching costs, a $60K vehicle purchase could get deferred.” Despite the target cut, Langan upped earnings per share estimates for Tesla, citing benefits from the Inflation Reduction Act and foreign exchange headwinds. In Tesla’s third-quarter report due out Oct. 19, the bank now expects a modest EPS beat of $1.05 per share, above consensus expectations of $1.03. Wells Fargo also expects a strong dollar to weigh on the company’s average selling price. “We forecast a slight Q3 beat as the benefit of pricing will likely be offset by FX headwinds,” Langan wrote. “Q3 likely focuses on IRA & demand.TSLA is likely the biggest IRA beneficiary; therefore, we are raising our 2023-26 EPS by ~33% to reflect IRA benefits.” Tesla shares are down 37% this year and sit more than 46% off their 52-week highs. — CNBC’s Michael Bloom contributed reporting

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