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Q4 2018 Earnings: Analysts Have Big Expectations Of Tesla Inc (TSLA)

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Tesla Inc (NASDAQ:TSLA) will be announcing its Q4 2018 earnings today, January 30th, after market close. Below are the comments from analysts on what they expect from the company’s results.


Q4 hedge fund letters, conference, scoops etc

JMP Securities

As Tesla prepares to report Q4 2018 earnings later today, we thought it would be useful to provide some perspective on what we are expecting and where we believe investors should be focused. Our stance on the stock continues to be the same, and we are buyers with a $408 price target. That target is based on our forecasted 2020 EBITDA, revenue, and free cash flow, discounted back to the present at 10% per year. We note that the 10% is higher than what we typically use, in recognition of the relatively higher risk associated with Tesla’s business. We assign a 15x multiple to EBITDA, 35x multiple to free cash flow, and 2.5x multiple to sales. We acknowledge that those multiples are high relative to conventional auto manufacturers, but we also point out that Tesla’s growth is far higher than what other auto companies are achieving.

Baird Equity Research

Tesla changed its Model S and Model X line-up, introducing new configurations with software-limited batteries. We believe this will be accretive to margins over the long run, as the company has effectively raised ASPs and streamlined manufacturing (now relying on a single battery hardware configuration) while incurring a relatively small incremental cost, in our view. As a reminder, we are buyers into Tesla’s Q4 2018 earnings, which will be released after market close today.

Morgan Stanley

Demand outlook, FY guidance, cash/liquidity needs and the next ‘big product’ roll-out should all get attention during Tesla’s Q4 2018 earnings conference call. We see the stock as trading very near fair value within a highly volatile range.

We understand there is a wide range of complex events that could influence the ultimate direction of Tesla’s stock price. While we acknowledge the significance of Tesla’s recent strong results (3Q and likely 4Q), we do not believe investors will assume the company is fully self-sufficient without a more sustained period of execution. The key message we want to emphasize to investors is two-fold: (1) the concept of what is achievable vs. sustainable in terms of cash flow generation and demand, and (2) that Tesla has significant strategic value that we believe can be crystalized in ways that may challenge traditional stand-alone DCF or comparable multiple-based techniques. Moreover, we are increasingly of the view that the confluence of economic, competitive, regulatory, political, and technological forces may potentially challenge Tesla’s status as a stand-alone entity.

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