Daniel Galves of Credit Suisse on Tuesday stated in a note that various auction and dealer checks suggest that Tesla Motors Inc TSLA is benefiting from strong demand.
Galves notes that order-to-delivery time for sales in the U.S. has expanded to a range of 2.5 to three months which is a “positive sign” for demand. The analyst adds that combined with production increases and weakening of China orders, there exists a “substantial uptick” in order flow for North America and Europe.
Galves also states that 2013 Model S's are achieving 90 percent of their original base price at auctions versus approximately 55 percent achieved by Mercedes S-Class and BMW 7-Series sedans. The analyst believes that these levels are likely unsustainable as supply of used Model S sedans increase, but the gap between Mercedes/BMW supports a view that Tesla vehicles will hold better value.
Galves concludes that based on the above, he has confidence that Tesla could achieve its 2015 Model S deliveries guidance of approximately 50,000 units, an increase of 50 percent year-over-year.
“If Tesla can grow Model S 50 percent in 2015 despite some significant risk factors, confidence in forward demand could increase significantly and drive the implied multiples much higher over the course of 2015 (even if 4Q14 deliveries are a bit light),” Galves wrote.
Shares are Outperform rated with a $325 price target.
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