Market Overview

KeyBanc: The Tesla Model 3 Is Fast And Elegant, But Maybe Too Simple

Share:
KeyBanc: The Tesla Model 3 Is Fast And Elegant, But Maybe Too Simple
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)’s Model 3 is now the best-selling electric car in the U.S., according to Bloomberg, and one analyst anticipates increasing demand.

The Rating

KeyBanc Capital Markets analyst Brad Erickson maintained a Sector Weight rating on Tesla. 

The Thesis

In discussions with Tesla investor relations representatives, Erickson said he “detected low confidence of no further production bottlenecks,” although hiccups will not necessarily weigh on demand. The Model 3 order book has grown week-over-week in spite of delays — a phenomenon KeyBanc expects to drive near-term stock appreciation.

Erickson remains ambivalent about the product’s potential, though. He found it “unbelievably fast” with an interior more elegant than expected, but said rough steering and the lack of a dashboard may deter buyers.

“The car mostly met our expectations: impressive performance-wise, but we remain unconvinced that the simple interior can compel the sustainable over-$40K buyer given the lack of range (we’ll see),” the analyst said in a Monday note. KeyBanc projects Model 3 gross margin underperformance.

Tesla’s recent executive departures are also factored into KeyBanc's Sector Weright rating. Erickson attributed the departures to better opportunities and involuntary layoffs that are not indicative of internal problems. Even in the most bullish case, Tesla investors are ascribing too much value to ostensible superiority in innovation, Erickson said. 

Price Action

Tesla shares traded down 1.6 percent premarket and were set to open at $316.22.

Related Links:

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

Tesla's Stock Unaffected By Report Of Factory Downtime

Photo courtesy of Tesla.

Latest Ratings for TSLA

DateFirmActionFromTo
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 electric vehicles EVs KeyBanc Capital MarketsAnalyst Color Reiteration Top Stories Analyst Ratings Best of Benzinga

 

Related Articles (TSLA)

View Comments and Join the Discussion!