Tesla could supersede its own delivery guidance of 10,000 to 11,000 units of electric vehicles in the second quarter, believes analyst Trip Chowdhry of Global Equities Research after a conversation with 65 to 70 people. In a note on Monday, Chowdhry reiterated his price target of $385 with an Overweight rating on Tesla.
Tesla to beat production guidance
According to the analyst, production of the Tesla Model S sedan is increasing gradually with production volumes now totaling around 1,150 units per week, and there are few weeks when this number is going up. In addition to the delivery guidance, Chowdhry believe it is “very likely” Tesla will also beat its production guidance of 12,500 units.
In August, the Tesla Model X configuration web page is expected to go live. Chowdhry noted that the upcoming SUV will represent a “phenomenon” for the company in the fourth quarter, and more than 80% of the 540 robots that will be used for its production are already in place. Further, there will be an alternate production line that will enhance the line speed by as much as 90%, reports Chowdhry.
Chowdhry said his price target of $385 is based on a 10x multiple of his full-year fiscal 2015 revenue estimates of $6.2 billion and full-year production expectation of 62,000 to 65,000 units, which looks quite reachable.
What other analysts have to say
Last week, Pacific Crest analyst Brad Erickson said he lowered his rating on Tesla from Overweight to Sector Weight in his report and assigned a fair value of $293 per share. Not long ago, Deutsche Bank analyst Rod Lache downgraded Tesla from Buy to Hold but raised his price target from $245 to $280.
Erickson argued that Tesla has a more balanced risk/reward profile due to shares rising from $185 at the end of March to $268 recently. Even though various concerns are now fading, such as low oil prices, competition and China demand, the analyst believes Model X optimism has spiked significantly ahead of the September launch. Additionally, Erickson has dropped his 2015 and 2016 estimates for Tesla due to lower leasing revenue, which will somewhat be counterbalanced by higher battery revenue.
The Palo Alto-based company is set to post its second quarter results on July 30 after the market hours. Wall Street expect the automaker to post a loss of 61 cents per share on revenue of $1.121 billion. On Monday, Tesla shares closed up 1.16% at $262.16, and year to date, the stock is up by almost 18%.