Market Overview

Tesla's Q1 Deliveries 'Better Than Feared,' KeyBanc Stays Positive For The Near Term

Tesla's Q1 Deliveries 'Better Than Feared,' KeyBanc Stays Positive For The Near Term
Related TSLA
Taking A Trade Break: Weak Overseas Data Center Stage Despite Solid Retail Sales
Tesla Has 'Apple-Like Consumer Brand' Potential, Wedbush Says In Bullish Initiation
Dow Jones Futures: The Worst Part About This Market Rally? The Best Stocks (Investor's Business Daily)

Tesla Inc (NASDAQ: TSLA) totalled nearly 30,000 deliveries last quarter, with all models falling below consensus estimates. But to KeyBanc Capital Markets, the report was “better than feared.”

The Rating

KeyBanc analysts Brad Erickson and Elliot Arnson maintained a Sector Weight rating on the stock and proposed a $300 fair value.

The Thesis

Despite the analysts’ general contentment, the 13-percent year-over-year declines in Models S and X proved troublesome.

“Part of our Sector Weight thesis longer term has been the view that at some point, investors might start to care that a significant portion...of the Company’s gross profit pool was no longer growing, and so while investors largely care about Model 3 for the moment, that S/X continue to point toward these trends makes multiple expansion arguments more challenging,” Arnson and Erickson wrote in a Wednesday note.

The analysts justify long-term ambivalence by rejecting perceptions of Tesla’s superiority in manufacturing, software, artificial intelligence and batteries.

They remain optimistic in the near term, however, considering Tesla’s “very low bar” for Model 3 production and improvements in profitability. Tesla produced 2,020 Model 3s in the last seven days of the quarter — a loss against its 2,500-per-week target but a win by Street standards.

“We believe the longer-term bulls care little about what the actual number is – only that it improved,” they wrote. “If and as the number continues to climb to something approaching 4,000-5,000, we think Model 3 gross margins should turn profitable, which doesn’t indicate it will meet long-term targets, but should prove to be better than the more bearish expectations of the car being EBIT negative, even at scale.”

Price Action

At the time of publication, Tesla was set to open down 4.4 percent at $255.72.

Related Links:

Jefferies Upgrades Tesla On Probability Of 'Drastic Action'

Everything You Need To Know About Tesla Today

Photo courtesy of Tesla.

Latest Ratings for TSLA

Dec 2018WedbushInitiates Coverage OnOutperform
Dec 2018BairdReiteratesOutperform
Dec 2018JefferiesUpgradesHoldBuy

View More Analyst Ratings for TSLA
View the Latest Analyst Ratings

Posted-In: Brad Erickson Elliot Arnson KeyBanc KeyBanc Capital MarketsAnalyst Color Reiteration Top Stories Analyst Ratings Best of Benzinga


Related Articles (TSLA)

View Comments and Join the Discussion!

Latest Ratings

View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Morgan Stanley Isn't Too Worried About Facebook Cutting Ties With Third-Party Data Providers

18 Stocks Moving In Wednesday's Pre-Market Session