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Deutsche Bank now sees Tesla Motors Inc (NASDAQ: TSLA) to report a loss in 2016 versus profit, while expecting a bigger sequential loss for the second quarter, as it's "unsure" whether the automaker has overcome its production challenges.
Analyst Rod Lache expects a loss of $0.42 in 2016 versus a profit of $0.09 to reflect the adjustment to Tesla's second quarter delivery forecast. For the second quarter, the analyst forecast a $0.94 loss, bigger than the $0.57 loss in the first quarter.
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"We assume 50k deliveries for 2H16 with a loss in Q3 and a profit in Q4 (in-line with Tesla's prior guidance). We are adjusting our estimated cash burn by $170MM, to ~$1.3bn from $1.15bn prev," Lache wrote in a note.
Tesla said it has delivered 14,370 vehicles in the second quarter, missing its forecast of 17,000. The electric car maker noted that half of the 18,345 vehicles produced during the second quarter occurred during the last four weeks of the quarter, underscoring the steep production ramp-up that they experienced.
Based on Tesla's new forecast, total 2016 deliveries would be about 79,000 (down from prior est's in the 80,000 - 90,000 unit range, and DB estimate of 818,000).
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"That said, suppliers continue to suggest Tesla has had difficulty maintaining steady production of Model X, with some estimating "up time" is as low as 50%. This is highly unusual for an automaker, considering this model was launched in 3Q15," Lache highlighted.
On a positive note, Lache said there are reasons to believe execution of the next phase of automotive growth should be achievable. Based on the forecast for EV cost reduction, the analyst still believes Tesla has potential to disrupt the Auto Industry with highly cost competitive EV's.
As such, Lache sees three significant drivers for the stock.
1) "Increasing visibility into TSLA's business plan"
2) "Re-focusing Tesla's strategy on execution of this plan (most investors, and we suspect most Tesla customers, have not yet signed up to all aspects of mgmt's plans for a broadly defined sustainable energy company)"
3) "Achieving execution milestones (i.e. production, cash flow)"
"We're maintaining our Hold as we seek additional visibility on these factors," Lache added.
At time of writing, shares of Tesla fell 3.22 percent to $209.52. The analyst has a price target of $290 on the stock.
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