Market Overview

Bank Of America: Tesla's Q3 Numbers 'Good, Not Great'

Share:
Bank Of America: Tesla's Q3 Numbers 'Good, Not Great'

Tesla Inc (NASDAQ: TSLA) closed down 4.1 percent Tuesday despite beating third-quarter Model 3 delivery estimates. Bank of America Merrill Lynch considers the market move just.

The Rating

Analysts John Murphy, Aileen Smith and Yarden Amsalem maintained an Underperform rating on Tesla with a $200 price target.

The Thesis

Tesla fell short of Bank of America forecasts for Model X and Model S deliveries, but its strong Model 3 metrics made up for the lagging lines.

“Admittedly, TSLA 3Q:18 deliveries came in ahead of expectations as throughput from production to delivery improved, and will likely be construed positively by the investment community today,” the analysts wrote in a note.

By their assessment, the quarter’s deliveries, strong mix and forecasted inventory workdown could drive better-than-expected cash flow and gross margins in the third quarter. Altogether, the factors would delay Tesla’s appeal to the capital markets.

“However, we believe many of these elements (particularly mix and inventory) are transitory in nature,” they wrote. “In addition, there still remain a number of material issues that remain ahead for the company.”

Their skepticism lies in production ramp and operational challenges associated with an expanding product portfolio; expectations for material cash burn and capital raises; rising competition and long-term obsolescence; and ongoing investigations into the CEO’s behavior.

Perceptions of “ongoing production/logistics woes” were vindicated by Tesla’s recent application to construct a new tent — a temporary solution for nagging capacity issues.

Price Action

At time of publication, Tesla shares were trading around $294.06, down 2.3 percent.

Related Links:

Cramer: The SEC Just Gave Tesla Shareholders A Helping Hand

Elon Musk Will Resign As Tesla Chairman, Remain CEO In Settlement With SEC

Latest Ratings for TSLA

DateFirmActionFromTo
Jul 2019ReiteratesUnderweight
Jul 2019MaintainsBuy
Jul 2019MaintainsNeutral

View More Analyst Ratings for TSLA
View the Latest Analyst Ratings

Posted-In: Aileen Smith Bank of America Merrill Lynch John Murphy Model 3Analyst Color Reiteration Top Stories Analyst Ratings Best of Benzinga

 

Related Articles (TSLA)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
MSGNDowngrades
HUBBInitiates Coverage On160.0
CTREUpgrades25.0
GLNGMaintains27.0
SEMaintains45.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
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.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

AMD's Stock Off To Rough October Start Following Best Quarter In Decades

Shares Of Chinese Internet Company Bilibili Soar On Tencent Stake