Credit Suisse Lowers EPS Estimate On Tesla

Credit Suisse reduced its EPS estimate for Tesla Motors Inc TSLA in a report issued Monday.

According to analyst Daniel Galves, the firm "reduced [its] 2014 EPS estimate to $0.86 from $0.96 to reflect expected drive unit-related warranty charge in Q3."

Despite the lower estimate, Galves noted several positive items from the company's recent investor meeting and that "the combination of Tesla capability and Electric Vehicle inherent advantages will be a disruptive force, supporting our long-term demand forecasts and enabling pricing power / excess margin."

The report noted that Tesla's speed to market is "astounding" and that the company "is on-track to increase production capability to 150k+ annualized in 2H15 from 40k in 2Q14, which should drive major margin expansion in 2H15. Galves forecasted “$7 per share of earnings power at 100k units in FY2016."

Galves also had increased confidence due to battery cost reductions and mentioned that the "company is now openly talking about $150 / kwh as a reasonable estimate for 2017, which implies ~$7k per-unit for base Model 3...and a cost decrease of ~$6k/unit on Model S/X."

Credit Suisse maintained an Outperform rating and $325 price target.

Tesla Motors Inc recently traded at $226.64, down 4.3 percent.