Tesla Motors Inc (NASDAQ:TSLA) is scheduled to release its next earnings report tomorrow after closing bell, and the automaker’s shares began to rally today, although they still remain well below where they were trading at just a few days ago. It’s possible that $150 is serving as a floor, as the stock did not spend much time lower than that on Monday, and it didn’t break below the 52-week low of $141.05. Of course tomorrow night, all bets are off. Year to date, the stock has tumbled 38%.

Tesla Motors Inc Price Target Cut For Slow Model X Ramp: Barclays

Tesla might disappoint tomorrow

Barclays analyst Brian Johnson trimmed his price target on Tesla Motors Inc (NASDAQ:TSLA) from $180 to $165 per share and reiterated his Underweight rating. He thinks Wall Street’s expectations must “come in check” but that despite this, the automaker’s stock could rebound in the near term. His estimates are significantly lower than the consensus, but he thinks tomorrow’s earnings report might indicate more about the risks related to a slow ramp of production for the Model X.

Johnson expects a loss of 1 cent per share, compared to the consensus of 8 cents per share in profits. His estimate is mainly because he is expecting Tesla to miss guidance for gross margin, which he pegs at 22.4%. Management guided for a slight decline from the third quarter’s 23.7%. He believes expenses related to the Model X ramp were higher than most were expecting as the SUV proved to be quite difficult to produce, and as a result, he doesn’t think the vehicle’s margins improved much. In fact, he thinks they might even have compressed as Tesla pushed international sales during the fourth quarter.

More focus on 1Q guidance

The Barclays analyst thinks investors will care more about Tesla’s guide than about the fourth quarter results, and based on the other earnings reports we’ve seen so far from other companies, this certainly seems to be the case. Investors have greatly punished companies that have given weak guidance since the fourth quarter reporting period began.

Johnson doesn’t think Tesla will surprise in its guide for this year as it has already given preliminary expectations for deliveries, cash and margins, although he’s below consensus, mostly because of the slow Model X ramp. However, he also said the automaker might disappoint on both delivery and gross margin guidance. The analyst projects 14,000 deliveries in the first quarter and doesn’t believe Tesla will be able to reach the bottom end of its goal of producing between 1,600 and 1,800 vehicles per week during the quarter.

He also believes this year will bring “significant” cash burn, although he thinks the second quarter might be cash flow positive as Tesla begins taking deposits for the upcoming Model 3. Johnson added that there’s a good chance the automaker will need to raise capital this year, possibly to the tune of between $1 billion and $2 billion, even though management has said they don’t want to do so until next year as momentum in the Model 3 could benefit a capital raise.

Model 3 might pull investors back

Johnson thinks investors might become interested in Tesla shares again when the Model 3 is unveiled, which is expected in late March. He expects a full concept car rather than only drawings, although recently we heard a rumor that the automaker might only have drawings to show at that time. If this ends up being the case, it would undoubtedly be a huge blow to Tesla and, in particular, its stock—especially as even bears like Johnson are expecting a full-blown car rather than just drawings.

The analyst thinks social media will play a major role in reigniting attention and adds that he’s not expecting production on the Model 3 to start until mid-2018, although prior reports have pointed to a late 2017 launch. Management is expected to reiterate that they expect production to begin in late 2017.

As of this writing, Tesla Motors Inc (NASDAQ:TSLA) shares were up 2.71% at $152 after briefly touching $158.27 earlier this morning.