Tesla's Q3 Results Lead FBN To Retain Outperform On Stock

Although Tesla Motors Inc TSLA marginally missed revenue expectations for Q3, earnings came in significantly ahead, driven mostly by opex management.

FBN Securities’ Shebly Seyrafi retained an Outperform rating with a $260 price target.

Tesla reported deliveries at 24,807, broadly in-line with the 24,500 guidance, and projected a similar amount in Q4.

“Gigafactory construction and Model 3 development are on plan to support volume Model 3 production and deliveries in FH2 2017,” Seyrafi wrote.

Tesla’s plans for a $5 billion battery gigafactory in the Nevada desert were met with widespread doubts.

The company reported revenue of $2.30 billion, representing 85 percent year-over-year growth, albeit missing the consensus expectation of $2.33 billion.

Tesla’s deliveries grew 114 percent year-over-year and 72 percent sequentially in the quarter. The company produced 25,185 vehicles, up 92 percent year-over-year and 37 percent sequentially.

Non-GAAP opex of $470.5 million was lower than the FBN estimate of $561.8 million.

“So the opex beat was the key source of the EPS beat,” Seyrafi pointed out.

Tesla maintained its guidance at ~50,000 new vehicle deliveries in the back half of 2016. The company plans for Q4 deliveries of merely 25,000.

“About 30-35% of the FQ4 deliveries are expected to be accounted for as leases for revenue recognition purposes,” the analyst mentioned.

The automaker had announced earlier this month that all-new vehicles would have full self-driving capability.

On Friday, Tesla and SolarCity Corp SCTY unveiled roofs integrated with solar panels, along with new versions of its batteries for buildings and the power grid. Tesla is also in the process of acquiring SolarCity.