UBS Maintains Sell On Tesla, Highlights Caution On FY Deliveries

Colin Langan of UBS maintained a Sell rating on shares of Tesla Motors Inc TSLA with an unchanged $140 price target ahead of the company's Q1 results, scheduled to be released after Wednesday's market close.

Langan is estimating Tesla will report a loss of $0.90 per share in the quarter, which is worse than the loss of $0.58 per share the consensus estimate is calling for. The analyst pointed out that the company reported a $67 million headwind charge in Q4 and he's expecting a continued headwind in the first quarter.

Langan said Tesla's preliminary Q1 deliveries of 14,800 (versus a 15,000 to 17,000 guide) "implies risks" to full year delivers. In fact, the analyst expects full year deliveries to be at the low end of the company's own 80,000-90,000 guidance.

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"Tesla's Q1 outlook implies a 28 percent quarter over quarter decline in Model S deliveries, possibly a sign demand for the Model S is slowing," the analyst wrote. "The reveal of the Model 3 will likely pull some demand away from the Model S as the Model 3 is half the cost."

Langan added that Tesla's Model X deliveries are "also concerning" and he's "cautious" on the company's ability to achieve a production rate of 700 to 800 Model X vehicles were week in the second quarter.

Finally, the analyst said Tesla will likely need to raise cash early next year as capital expenditures is expected to reaccelerate in the bottom half of 2016 and into 2017 given ongoing investments in the Model 3 and a doubling of supercharger capacity by the end of 2017.