Tesla Motors Inc (TSLA) Estimates & PO Raised On Better Q1 Volume

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Tesla Motors Inc (NASDAQ:TSLA) announced that 1Q13 Model S unit sales reached 4,750, which exceeded its prior outlook and analysts estimate of 4,500 units by about 5.5%. This, in combination with an expected 1Q 2013 non-cash gain of approximately $10mm from the elimination of Tesla Motors Inc (NASDAQ:TSLA)’s DOE warrant liability, will likely result in the company reaching GAAP profitability in the quarter.

Tesla Motors Inc (TSLA) Estimates & PO Raised On Better Q1 Volume

Also, given the company’s treatment of non-cash stock compensation, Tesla Motors Inc (NASDAQ:TSLA) should generate 1Q13 Non GAAP EPS of ~$6mm or ~$0.05/share. Due to Tesla Motors Inc (NASDAQ:TSLA)’s slightly higher volume and analysts expectation that pricing should remain relatively firm, BAML analysts are raising their 2013 non GAAP EPS from $0.10 to $0.45, 2014 from $1.80 to $1.95, and 2015 from $2.10 to $2.25. Also, given BAML’s higher estimates, analysts are raising their price objective on Tesla Motors Inc (NASDAQ:TSLA) shares from $30 to $33, based on a scenario analysis derived 2014 EV/EBITDA multiple of ~11X. BAML notes that their prior PO of $30 was based on an EV/EBITDA multiple of ~10.4X, utilizing the same approach.

While analysts from BAML are encouraged by Tesla Motors Inc (NASDAQ:TSLA)’s slightly better than expected unit sales performance in 1Q, they continue to believe meaningful execution challenges could lie ahead as volumes ramp. They also believe Model S demand could cool off once many of the early adopters receive their vehicles.

Finally, despite solid technology and the beginnings of a charging station network, the average consumer remains unlikely to sacrifice convenience (ie: ubiquitous gas station network) in order to own an electric vehicle, in analysts view. In short, BAML forecast better, less volatile opportunities for share price appreciation elsewhere within their automotive coverage universe and therefore maintain firm’s relative Underperform rating.

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