Goldman Sachs: Here's Why Tesla Cut Guidance

In a report published Thursday, Goldman Sachs analyst Patrick Archambault maintained a Neutral rating on Tesla Motors Inc TSLA, while reducing the six-month price target from $236 to $234, despite the company reported in-line 2Q results. Tesla reported its 2Q15 non-GAAP revenue at $1.2bn and EPS at -$0.48, meeting the Goldman Sachs estimates. Analyst Patrick Archambault added, however, that the company's total gross profit, excluding ZEV credits, was weak at 23.4 percent, as compared to the Goldman Sachs estimate of 26 percent. The company met the bottom line estimate on the back of lower opex. Tesla guided to weaker-than-expected numbers, reducing its 2015 delivery guidance from 55k units to 50k-55k units. It also projected an average weekly production rate of 1,600 to 1,800 vehicles for next year, down from the previously discussed 2,000. Archambault mentioned that the reduction in volume was on account of launch issues which have delayed the Model X ramp and may impact the Model S volumes. "While we have only made slight changes to our volume forecasts, the negative for us is worsened visibility given the disruptive potential of the launch." Goldman Sachs reduced the EPS estimates for 2015, 2016 and 2017 from $0.38 to -$0.67, from $3.44 to $2.29 and from $4.82 to $3.75, respectively. "The largest part of our downward estimate revision is lower gross margin with the company's profit curve having been reset somewhat by a larger adverse effect from FX and mix than we had previously modeled," the report explained.
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