Tesla Motors Inc (NASDAQ:TSLA) released their 4Q13 results yesterday, and these analysts were impressed, raising their price target and maintaining and Outperform rating on the electric car manufacturer. 

Tesla Motors

Tesla Earnings:

Tesla Motors Inc (NASDAQ:TSLA) posted impressive 4Q13 results. 4Q13 non-GAAP revenue/EPS were $761.3m/$0.33 vs. our estimate of $710.0m/$0.28 and consensus of $683.1m/$0.21. 4Q13 non-GAAP gross margins were 24.9%, vs. our estimate of 25.8%, consensus of 25.3% and company target of 25% excluding credits. Tesla Motors Inc (NASDAQ:TSLA) delivered 6,892 Model S vehicles in 4Q13. Revenue and EPS ahead were aided by a favorable increase in Model S ASPs reaching $106k vs. $103k in 3Q13.

Tesla guided to significant 1Q14 production growth and continues to ramp R&D and marketing expenses aggressively. Guide is for 6,400 1Q14 deliveries with 7,400 units produced, with full year deliveries of 35,000 units.

Automotive gross margin continues improving. Tesla recorded 4Q13 non-GAAP automotive gross margin of 25.2%, compared to 21% in 3Q13 and 14% in 2Q13. The company targets gross margin of 28% by the end of 2014, which conservatively assumes a lighter slate of vehicle options.

While little was said on the 30GW battery factory details will come next week.

Tesla is increasing Model S production capacity to meet their 2H14 forecasts.

Tesla PT, Estimates Lifted

We are raising estimates for strong 2014 margin and unit delivery guidance.

We are raising our price target to $225 (from $205) and reiterate our OUTPERFORM rating. Our target is based on 30.0x 2017E EPS of $10.00, discounting back three years using a 10.0% discount rate, (versus a four year period previously). We believe valuation based on 2017 estimates is appropriate as that is the first year Gen-III volumes are expected to scale, and view a 30.0x EPS multiple as fair since Tesla should still be doubling earnings at that point.

We see strong positives in Tesla Motors Inc (NASDAQ:TSLA)’s credible path to longer-term battery cost reduction and the Gen-III vehicle target costs, and what we believe will be a receptive buying public willing to purchase EVs while retaining reasonable expectations for these vehicles. Tesla’s multi-year lead over credible competition suggests the company is well positioned to deliver an aggressive volume ramp.

Risks to the achievement of our price target include the potential for sales volumes below expectations or for profitability on company vehicle sales to miss targets. We see longer-term risks coming from possible cost escalation and delays in the Gen III vehicle platform and risks of continued push-outs in Panasonic’s advanced battery technologies possibly resulting impacting the rate of cost improvement.

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