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Wall Street Focused On Tesla's Batteries, Valuation Heading Into Earnings

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Wall Street Focused On Tesla's Batteries, Valuation Heading Into Earnings
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Tesla Motors Inc (NASDAQ: TSLA) is scheduled to report its second-quarter results after Wednesday's market close. The Estimize community is projecting the company to lose $0.50 per share on revenue of $1.166 billion. This compares to the Wall Street consensus estimate calling for a loss of $0.57 per share on revenue of $1.153 billion.

Here is a summary of what Wall Street's top analysts are saying heading into the print.

Deutsche Bank: Remaining Confident On Unit Sales

Rod Lache of Deutsche Bank commented in a note last week that Tesla's $1,000 incentive referral discount doesn't indicate any weakness in demand.

Lache noted that Tesla's CEO Elon Musk indicated that U.S. orders for Model S units rose 30 percent year-over-year in the second quarter, European orders rose 60 percent from a year ago while Asian orders doubled sequentially over the same time period.

Lache remains "confident" in his 55,000 unit sales estimates for the full fiscal year and that his 86,000 unit forecast for next year may "prove conservative."

Shares were reiterated with a Hold rating and $280 price target.

Related Link: Trip Chowdhry Discusses Tesla's Auto-Pilot & Software Updates, Thinks NVIDIA & Mobileye Will Benefit

Credit Suisse: Q2 Success May Have Carried Over To Q3

Dan Galves of Credit Suisse also commented on Tesla's referral program, and reached a similar conclusion that the program is not a sign of demand weakness.

Galves argued that there is sufficient evidence to reasonably conclude that Model S demand remains strong. First, the analyst stated that based on Tesla's website, vehicles ordered today will only get delivered in September. Second, second-quarter deliveries were up 13 percent from the first quarter (excluding Norway, deliveries were up over 40 percent). Third, the lower-end S70D should drive incremental global demand in the third quarter.

Finally, Galves cited Musk's comments during a recent Reporters roundtable that second-quarter Model S orders in North America grew 30 percent, Europe orders grew 60 percent and Asian orders doubled all from the first quarter.

Galves concluded that the strong second-quarter order flow should benefit third-quarter deliveries.

Shares were reiterated with an Outperform rating and unchanged $325 price target.

UBS: Near-Term Challenges ‘Rising'

Colin Langan of UBS commented in a note in late July that the addition of the Model X in the third quarter will increase Tesla's "production complexity" and could put deliver targets at risk. In addition, the company may see R&D and SG&A costs accelerate ahead of the Model 3 launch in 2017.

Langan also noted that Tesla's long-term target of 1.5 million deliveries will result in the company needing $6 billion to $9 billion in investments for new factories, thereby increasing the risk of diluting the stock.

Shares were downgraded to Sell from Neutral with a price target lowered to $210 from a previous $220.

Evercore: Checks Reveal Strong Demand

Arndt Ellinghorst, Evercore ISI's U.K.-based auto analyst looked at the pre-owned car market to conclude sales of Tesla's Model S remain strong.

Ellinghorst analyzed more than 350 pre-owned Model S cars and noted that prices are around 90 percent of the vehicle's base price when sold as new and held up better than Mercedes S-Class vehicles. The analyst concluded that the "impressive" used prices indicate demand for Model S remains "strong." In addition, further checks reveal that Tesla is not discounting used cars that do not sell in the first 60 days.

Shares were reiterated with a Buy rating and unchanging $320 price target.

FBN: Incrementally Bullish Following Delivery Numbers

Shebly Seyrafi of FBN Securities commented in a note in early July that Tesla's announcement that it shipped 11,507 model S vehicles in the second quarter is higher than the company's prior guidance of 10,000 to 11,000 vehicles and represents a "larger beat" versus the 10,045 vehicles shipped in the first quarter when the company guided to at least 9,500 vehicles shipped.

Seyrafi is now estimating Tesla will deliver around 57,000 vehicles for the full fiscal 2016, ahead of prior guidance of 55,000 units.

Shares were reiterated with an Outperform rating with a price target raised to $325 from a previous $275.

Latest Ratings for TSLA

DateFirmActionFromTo
Oct 2016Goldman SachsMaintainsNeutral
Oct 2016Goldman SachsDowngradesBuyNeutral
Sep 2016Cowen & Co.Initiates Coverage onUnderperform

View More Analyst Ratings for TSLA
View the Latest Analyst Ratings

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