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Goldman Sachs: Tesla Could Hit Model 3 Production Target, But Report Disappointing Delivery Totals

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Goldman Sachs: Tesla Could Hit Model 3 Production Target, But Report Disappointing Delivery Totals
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Whether Tesla Inc (NASDAQ: TSLA) has achieved its second-quarter targets for the Model 3 will be revealed in the coming week —and Goldman Sachs isn’t hopeful.

The Analyst

Analyst David Tamberrino maintained a Sell rating on Tesla with a $195 price target.

The Thesis

Based on VIN registrations, Model 3 production rates are seen to average around 2,200 per week for the second quarter, below both Tesla's guidance and an elevated consensus estimate, Tamberrino said in a Tuesday note. (See the analyst's track record here.)

Goldman Sachs expects 22,000 quarterly deliveries against a consensus forecast of 28,000 cars.

Tesla could strike a dubiously sustainable but psychologically critical 5,000-unit rate at the end of June with the aid of newly added assembly lines, Tamberrino said. The prospects around the target are seen to buoy the stock at its $330 level, although the metric may not be in focus much longer, the analyst said. 

“Investor conversations on the stock have moved past the 5,000-per-week run-rate production target," a figure most investors are giving the company credit for achieving as it enters the third quarter, he said.

Shareholders are now zeroing in on vehicle profit margins and the conversion of Model 3 reservations to higher-priced vehicles, Tamberrino said. 

Given Tesla's quarter-to-date delivery cadence, Goldman Sachs expects a 4-percent year-over-year increase in combined Model S and X deliveries, which would amount to a consensus beat but a guidance miss.

Price Action

At the time of publication, shares were trading down 1.6 percent to $327.64.

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Photo courtesy of Tesla. 

Latest Ratings for TSLA

DateFirmActionFromTo
Oct 2018Canaccord GenuityMaintainsHoldHold
Oct 2018JMP SecuritiesInitiates Coverage OnMarket Outperform
Oct 2018MacquarieInitiates Coverage OnOutperform

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