Tesla Analysts Highlight Q3 Profitability, Question 500K Delivery Goal For 2020

Analysts are reacting to the third-quarter earnings report from Tesla Inc TSLA — and the electric automaker holding the line on its goal of 500,000 deliveries for the full fiscal year.

Tesla Analysts On Profits: One of the highlights for analysts was Tesla’s record third-quarter profitability. 

“We view last night’s quarter from Tesla as another major step forward in the company’s ramp around Model 3 deliveries as well as profitability heading into 2021,” Wedbush analyst Daniel Ives said in a note.

Ives, who has a Neutral rating on Tesla with a $500 price target, said the upside to consensus estimates “speaks to the manufacturing efficiency and success Tesla is seeing, especially out of China.”

Wedbush raised its bull case price target for Tesla from $700 to $800.

Morgan Stanley analyst Adam Jonas said Tesla set records in deliveries, revenue, profitability, margins and cash flow.

Jonas, who has an Equal-weight rating on Tesla, said the automaker comfortably beat consensus estimates even when removing emission credit revenue.

Related Link: Tesla’s Debt Overview

Needham Questions Profit Sustainability: Needham analyst Rajvindra Gill questioned whether the strong quarter from Tesla is sustainable.

“Tesla has continued to struggle with the pursuit of both making more affordable electric vehicles while also lowering production costs far enough that it is also able to make a profit,” the analyst said. 

Gill, who has an Underperform rating, asked whether Wednesday's report was only a “mere on-quarter uptick.”

Tesla is still showing consistent GAAP net losses, the analyst said. 

Tesla’s Delivery Guidance: “China remains the hearts and lungs of the Tesla demand growth story playing out over the next year along with underlying Europe EV strength playing out in the field,” said Wedbush's Ives. 

Needham's Gill called the guidance for 500,000 deliveries in 2020 “highly ambitious.”

To hit this goal, Tesla would have to grow fourth-quarter deliveries by around 30% quarter-over-quarter versus a three-year average increase of 13% for the fourth quarter.

Jefferies analyst Philippe Houchois called the 500,000 delivery goal “challenging.”

Jefferies has a Buy rating and $500 price target.

Early Look At Tesla's 2021: Tesla provided an early look at next year’s target for deliveries. 

The consensus on the Street is 720,000 deliveries for the next fiscal year. 

Tesla CEO Elon Musk was supportive of 800,000 or more deliveries next year during the conference call, said Morgan Stanley's Jonas, adding that this was not formal guidance. 

Jefferies' Huchois said early volume indicates that next year's deliveries will hit a range of 800,000 to 1 million. 

TSLA Price Action: Tesla shares were trading 2.67% at $433.92 at last check Thursday. 

Related Link: Jim Cramer On Tesla's Q3 Earnings: 'Flawless Execution'

Photo courtesy of Tesla. 

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Posted In: Analyst ColorEarningsNewsGuidancePrice TargetReiterationAnalyst RatingsTechAdam JonasDaniel Iveselectric vehiclesElon MuskEVsJefferiesMorgan StanleyNeedhamPhilippe HouchoisRajvindra S. GillWedbush