Baird Still Buying Tesla, Raises Price Target To $338

Tesla Motors Inc TSLA reported its 1Q results largely in-line with expectations. Baird’s Ben Kallo reiterated an Outperform rating for the company, while raising the price target from $300 to $338. The analyst mentioned that Tesla seemed to have resolved most of its Model X production issues and had several upcoming catalysts.

Results

Tesla reported its 1Q non-GAAP revenue at $1,602M, ahead of the consensus expectation of $1,493M. Non-GAAP net income came in at ($75.3M) and non-GAAP EPS at ($0.57), better than consensus estimates of ($100.6M) and ($81.1M), respectively.

Guidance

Tesla reaffirmed its 2016 delivery targets. The company projected 2Q production of ~20k vehicles, and delivery of ~17k vehicles, ahead of expectations.

Tesla also indicated that it could reach a production rate of ~2k per week of Model S and Model X in Q2, “which should enable the company to have strong delivers (50k+) in 2H:16,” analyst Ben Kallo said. The delivery schedule was in-line with expectations, and Kallo believes the company is well positioned to reach its FY16 target.

Production Ramp

Model X production continues to accelerate, with Tesla having resolved its supply chain issues. In Q1, production was nearly five times the production in Q4. The analyst commented that an increased number of Model X vehicles on the road would boost demand further.

Tesla recorded more than 400k Model III orders and is ramping up production into 2H17 to meet the huge demand. “We continue to model zero Model III deliveries in 2017, and increased our 2018 Model III estimate to ~160k (up from 40k), and total deliveries to 300k versus TSLA’s 500k vehicle target,” Kallo wrote.