Tesla's Model X Is Coming: Here's What Baird, Morgan Stanley Think About It

In light of the upcoming launch of the Model X by Tesla Motors Inc TSLA, analysts remain optimistic on the stock. According to Smarter Analyst, Robert W. Baird & Co. analyst Ben Kallo in a note published on Friday, June 19, reiterated an Outperform rating on the stock with a price target of $335.

Tesla CEO Elon Musk provided many insights into the future of Tesla at the annual meeting last week. Among those, the launch of the Model X garnered the most attention. The Model X will be the first electric SUV for the company and will be released within three to four months. The exact specifications of the Model X are not yet known, yet Tesla has already received 20,000 reservations, marking consumer confidence in the company’s product line.

Much of this interest in the Model X comes from the obsession with crossover SUVs in the American market. Tesla, however, has targeted the rapidly growing segment of female consumers. Over half of the Model X reservations are from women and over 40 percent of total car sales are accounted for by women. Musk has publicly stated that Tesla wants to bring more women into their product line, and it seems to be working.

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A potential setback for the Model X could be the limited production capacity of Tesla factories. Many analysts believe that it would very difficult for Tesla to significantly increase unit sales numbers in the four month window before the scheduled launch. Morgan Stanley analyst Adam Jonas, despite maintaining an Overweight rating on the stock on June 16, believes that Tesla may miss its sales goal by 4,000 units, expecting only 3,100 Model X deliveries due to limited production.

On the other hand, Ben Kallo believes that Tesla’s Freemont Factory is productive enough to meet capacity. This is part of the firm’s positive stance on Tesla and its ability to meet its unit sales target. “Tesla continues to methodically ramp production to meet its target of 55k deliveries by year end,” Kallo noted. He added, “We continue to recommend buying shares at these levels ahead of the Model X launch.” He also mentioned that Tesla’s new painting factory was impressive and another reason to invest in the company.

Though there is potential for production to be less than expected, most analysts are bullish on Tesla, citing the success of the Model S and the consumer desire for the Model X. Furthermore, Tesla bested Wall Street expectations in its record first quarter and beat its own production estimates by 10 percent, adding to its appeal.

Kallo currently has 61 percent success rate recommending stocks and an average return of +12.5 percent per recommendation. The analyst has rated Tesla 32 times total, earning an 82 percent success rate recommending the stock and a +35.5 percent average return per Tesla recommendation.

On average, the top analyst consensus for Tesla on TipRanks is Moderate Buy.