KeyBanc: Tesla's Q2 Numbers Are A Boon For Bulls

Tesla Inc TSLA boasted over the weekend that it met its quarterly production goal, although the figures were reportedly achieved beyond deadline.

Success or not, KeyBanc Capital Markets was satisfied.

The Rating

Analyst Brad Erickson maintained a Sector Weight rating on Tesla with a $300 price target.

The Thesis

Tesla’s 18,440 Model 3 deliveries fell far short of KeyBanc’s 30,000 forecast and the consensus estimate of 26,646. Investors should be content after counting in-transit vehicles, which bring the total to 29,606, Erickson said in a Monday note. (See the analyst's track record here.)

Production rates were given a similar pass.

“While Model 3 deliveries came up well short of expectations, production ramping to 28,578 total and 5,000 in the past week should assuage some concern that it can build the car at higher volumes,” the analyst said. 

In another boost to the bull thesis, Tesla reported that its reservation cancellation rate is not as high as reports have suggested, and reiterated guidance for positive GAAP net income in the third and fourth quarters.

KeyBanc's Sector Weight rating is justified, as investors already appreciate a "perceived innovative superiority" for the company, Erickson said. 

Price Action

Tesla shares were set to open down 0.87 percent Tuesday.

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Photo by Brett Hershman.