Tesla Motors Inc (NASDAQ:TSLA) has analysts working overtime. After the company smashed the second-quarter consensus estimates and offered upbeat guidance for the next year, analysts from several research firms have been trying to catch up. The San Francisco-based company reported earnings of $0.11 per share on revenue of $858 million. The company aims to exit FY2015 with 100,000 production run rate, much higher than the estimates of most Wall Street analysts. The company also announced a partnership with Japan’s Panasonic Corporation (ADR) (OTCMKTS:PCRFY) (TYO:6752).
JPMorgan encouraged by Tesla’s advances with Gigafactory
JPMorgan raised its price target from $163 to $170, though it maintains its Neutral rating on the stock. JPMorgan’s price target reflects about 30% downside from the current level. JPMorgan analyst Ryan Brinkman said the quarterly result was unsurprising, but he was encouraged by the developments related to the Gigafactory. The research firm had earlier expressed concerns over the battery project considering its capital intensity.
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Though Tesla Motors Inc (NASDAQ:TSLA)’s Q3 delivery guidance of 7,800 units was well below JPMorgan’s forecast of 10,200 units, it was mainly due to the temporary shutdown at its Fremont plant. The research firm said Tesla’s Q2 deliveries showed strong execution. The company delivered 7,579 vehicles during the quarter, slightly below JPMorgan’s estimate of 7,800 units. However, strong selling prices helped revenue of $858 million handily beat the research firm’s expectations of $822 million.
Can Tesla reduce the battery costs to $100/kWh?
On the other hand, UBS analyst Colin Langan raised his price target from $200 to $230. Tesla Motors Inc (NASDAQ:TSLA) aims to bring down the battery costs to $100/kWh in the next 10 years. UBS said investors should expect product surprises, possibly related to the stationary storage opportunities. However, the research firm is skeptical on Tesla’s goal of $100/kWh battery cost because that’s lower than the cost of raw materials in the battery.
Langan said Tesla Motors Inc (NASDAQ:TSLA) forecast only “marginal profitability” in the current quarter as the R&D and SG&A expenses rise. The company relies on a $10 million QoQ increase in ZEV credits. The research firm lowered its FY2014 earnings guidance from $1.20 to $1.10 per share to reflects increased R&D costs. However, UBS has raised its FY2015 EPS target from $3.90 to $4.25 to reflect faster production ramp.