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Shares of Tesla Motors Inc TSLA were trading higher by more than 4 percent early Thursday morning.
- Rod Lache of Deutsche Bank maintained a Hold rating on Tesla's stock with an unchanged $280 price target.
- Lache noted that Tesla's 80,000 to 90,000 delivery guidance could be achievable and result in a positive net cash flow for the company.
According to analyst Rod Lache, Tesla's fourth-quarter performance was a "mixed bag" as execution proved to be "somewhat disappointing" given a slower-than-expected ramp of the Model X and higher than expected operating expenditures. On the other hand, orders for Model S vehicles are currently higher by 35 percent year-over-year and reservations for the Model X are higher by 75 percent since the end of 2015.
Related Link: Credit Suisse Lowers Tesla's Price Target To $240; 'Choppy Path, But Worth The Wait'
Lache added that Tesla's strong reservation figures should "help reinforce confidence" that Tesla could achieve its 80,000 to 90,000 unit forecast for 2016. In addition, if Tesla could achieve positive net cash flow over the course of 2016 if the targets are achieved.
Over the longer-term, Lache suggested that demand for Tesla's products "could dwarf expectations."
Lache continued that Tesla is still in a "strong position" to benefit from the convergence of electrification versus internal combustion. However, the analyst did caution that there remains "significant execution risks" ahead, specifically what will happen to Model S demand once the lower cost Model 3 is revealed.
Bottom line, a Neutral rating best reflects the risks ahead at a time when "Street expectations have clearly turned cautious."
Shares remain Neutral rated with an unchanged $280 price target.
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