12:31 PM EDT, 09/27/2024 (MT Newswires) -- Tesla (TSLA) is expected to report third-quarter vehicle deliveries above Wall Street's estimates amid strength in its key China market, along with price and demand stabilization, Wedbush Securities said in a Friday client note.

The Street is looking for 462,000 deliveries in the third quarter, with "whisper numbers around" 465,000 to 470,000 units, the brokerage said. Tesla, which delivered 443,956 vehicles in the June quarter, is expected to release its latest delivery report next week.

The third quarter is projected to provide a "solid rebound" for the second half, Wedbush analysts led by Daniel Ives wrote in the note. Demand for Tesla's vehicles in China continues to rise with favorable leasing and financing terms, which should help post substantial growth in the region.

Europe is expected to be "a slight overhang" with subsidies and macro pressures, potentially offset by demand stabilization in the US and improving appetite in other regions of the world, Wedbush said.

"We remain confident in the Tesla story as we believe this (third-quarter) deliveries print could be a major step back in the right direction with the turnaround story underway fueled by a strengthening backdrop and key innovations in (artificial intelligence/full self-driving) space propelling the company forward," Ives said.

The brokerage expects Tesla to refrain from cutting vehicle prices thus easing pressure on its margins. "We believe gross margins should finally start to rebound from these levels with (the third quarter) a big step forward," according to Ives.

The brokerage maintained its outperform rating on the electric vehicle manufacturer's stock with a 12-month price target of $300.

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