Tesla Motors is scheduled to release its next earnings report tonight after closing bell, and analyst estimates are all over the map. The consensus suggests adjusted losses of 58 cents per share on $1.6 billion. In last year’s first quarter, the automaker posted adjusted losses of 36 cents per share on $1.1 billion in sales.
Tesla missed delivery expectations
UBS analyst Colin Langan has a Sell rating and $140 per share price target on Tesla stock and very bearish estimates to along with them. He’s expecting losses of 90 cents per share, noting that the automaker posted 87 cents per share in adjusted losses and that deliveries declined 15% sequentially. He adds that Tesla had about $67 million in headwinds in the fourth quarter as a result of negative allocations for labor and overhead and an impairment, and he expects these issues to continue in the first quarter because deliveries were not as high as expected. He also expects margins to disappoint because of these headwinds.
Langan is cautious on deliveries for this year as Tesla delivered only 14,800 vehicles in the first quarter, missing the guide for 15,000 to 17,000 vehicles. He still expects the automaker to meet its full-year guidance, but only at the low end of the 80,000 to 90,000 outlook.
Further, Tesla’s guidance suggested a 28% sequential decline in Model S deliveries, which he believes might signal slowing demand for the Model S. He’s also concerned about Model X deliveries as the automaker has been having trouble ramping production.
Tesla’s sales might outperform
At the opposite end of the spectrum we have Stifel analyst James Albertine, who has a Buy rating and $325 per share price target. He’s projecting losses of 50 cents per share but believes Tesla might surprise to the upside on sales because of a mix shift toward the more expensive Model X rather than the Model S. He noted that the automaker reiterated its target of producing 1,000 Model X SUVs per week by the end of the second quarter after ending the first quarter at about 750 per week.
Ever the extreme optimist on Tesla, Albertine believes the automaker might have actually improved its brand in dealing with the 2,700 recall on the brand new Model X in connection with third-row seats that could fold forward in a crash. Management approached the problem by spotlighting the company’s customer service during a recall.
He believes investors will focus on full-year delivery guidance, which he expects to remain at 80,000 to 90,000, automotive gross margin guidance, which he expects to remain at 30% on the Model S and 25% on the Model X by the end of the fiscal year. He also believes investors will be looking for a ramp in expenses and keeping an eye on free cash flow as there have been many reports and speculations that the automaker will do a capital raise this year despite management’s comments to the contrary.
Albertine does think a capital raise seems logical because of how strong demand for the Model 3 has been, but he believes management will put off this decision until later this year. He hopes to hear an update on the gigafactory and possibly on the construction of the Model 3 production line.