Tesla Motors Inc ‘Very Likely’ To Beat 2Q Delivery, Production Guidance

Tesla stockBlomst / Pixabay

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%.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com

5 Comments on "Tesla Motors Inc ‘Very Likely’ To Beat 2Q Delivery, Production Guidance"

  1. Explain how the entire corporation is dependent on the Model S sales? Well, for a car company Tesla is still a baby. It is investing in more models: the Model X and the 3 series.

    Where the Model S profit is?
    Start with the bottom line loss of the company all add back all spending on growth (expanding car factory by 50%, more stores, more superchargers, gigafactory, …). I think it is pretty clear that total spend money on growth is a lot more then their company loss.
    Secondly, Tesla says they have around 20% profit per sold car, I’m pretty sure that is not a complete lie, but I see you seem to think so.

    Lost 154,000,000 million dollars? That is 154 trillion dollars loss for a 30 billion company? But you call me the one using BS reporting?

    So I’m an investor in the company and I want them to spend as much money as possible in a smart way in growth and future profits. I only want to see enormous growth and great products, I don’t need to see profit in the next years.

  2. PhD in Reality Therapy | Jul 14, 2015, 10:53 pm at 10:53 pm |

    Explain profit and loss to me. Explain how the entire corporation is dependent on the Model S sales. If you add up total sales, subtract the the expenses, the losses are staggering. Please explain to me where this model S profit is? The financial statement says they lost 154,000,000 million dollars last quarter. You are talking fuzzy math, enron math and bernie madoff math. Some day they are going to have to be honest. You state they are investing in the future, ie the giga factory etc. I am not against Tesla, worked there a long time, I am however against BS reporting.

  3. The only reason Tesla has such a high spending is because they are investing huge amounts of money in all kinds of growth. Tesla has an industry leading profit margin on the Model S.

  4. PhD in Reality Therapy | Jul 14, 2015, 1:24 pm at 1:24 pm |

    There are so many financial analysts invested into Tesla I do not believe any of this hype. The price is up because of hype and big firms playing charades and pictionary with John Q public. The company at 12,000 units a quarter cannot turn a respectable profit. Its always the article of hype, and the giga factory will be the biggest building in the world. Scale back the BS and look at the numbers, the company is a financial, loser bleeding cash, wait hemorrhaging cash. All for the greater good right? Con game, shell game, of Enron, Bernie Madoff proportions.

  5. I even dare to say that they will have delivered close to 11,507 vehicles…

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