Market Overview

From KeyBanc, A Pessimistic Prediction For Tesla's Q4 Deliveries

From KeyBanc, A Pessimistic Prediction For Tesla's Q4 Deliveries
Related TSLA
New Oanda CTO Should Drive Major FinTech Expansion
Earnings Preview: Oil Giants Chevron And ExxonMobil Report Friday Morning
The European Central Bank Updates, And The EU Monitors Imports (Wall Street Breakfast Podcast) (Seeking Alpha)

Tesla Inc (NASDAQ: TSLA) is expected to announce fourth quarter delivery data at some point next week and at least one notable Wall Street analyst is offering a pessimistic view.

The Analyst

KeyBanc Capital Markets' Brad Erickson maintains a Sector Weight rating on Tesla's stock with no assigned price target.

The Thesis

Tesla's fourth quarter delivery figures are likely to come in short of sell-side expectations, but "acceptable" enough relative to buy-side standards, Erickson said in a note. Based on checks and conversations with 18 different Tesla stores, the analyst projects Model 3 deliveries to be around 5,000 in the fourth quarter, which is notably below his prior estimate of 15,000.

Despite what appears to be a concerning estimate of just 5,000 deliveries, investors shouldn't necessarily view this as a huge negative, Erickson said. Bullish investors are mostly concerned with seeing Model 3 cars being produced with minimal defects and are receiving favorable reviews from consumers. Nevertheless, Tesla may be fighting against the clock as it has "a few more quarters before the company is more harshly judged" especially in terms of gross margin ramp.

Tesla's Model S and Model X deliveries for the quarter are "tracking generally in line" with management' expectations that the bottom half of 2017 deliveries would come in ahead of the first half total of 47,000 cars.

Bottom line, the analyst's longer-term concerns remain unchanged, including sales growth of Model S and Model X aren't improving, gross margins are unlikely to ramp in-line with expectations, and a "cautious" view on the ultimate Model 3 demand at a price point, which is needed to achieve the company's gross margin target.

Price Action

Shares of Tesla were trading lower by nearly 1 percent ahead of Wednesday's market open.

Related Links:

Adam Jonas: Tesla Could See A Major Inflection In Free Cash Flow Next Year

Tesla Delivers On Promise Of World's Largest Battery, Cars Still Pending

Latest Ratings for TSLA

Apr 2018Morgan StanleyMaintainsEqual-WeightEqual-Weight
Apr 2018Vertical GroupInitiates Coverage OnSell
Apr 2018JefferiesUpgradesUnderperformHold

View More Analyst Ratings for TSLA
View the Latest Analyst Ratings

Posted-In: Brad Erickson KeyBanc Capital Markets Model 3Analyst Color Previews Top Stories Analyst Ratings Trading Ideas Best of Benzinga


Related Articles (TSLA)

View Comments and Join the Discussion!