Tesla Motors Inc (NASDAQ:TSLA) is rapidly becoming the new darling of Wall Street. The stock jumped as much as 13 percent Friday morning after making significant gains on Thursday as well. So where will the company go next? If its first quarter earnings report is any indication, Tesla Motors Inc (NASDAQ:TSLA) has nowhere to go but up, at least for now, but not everyone is convinced just yet.
Addressing The Bearish Concerns About Tesla Motors
JPMorgan Morgan Securities analysts Ryan Brinkman, Amy L. Carroll and Samik Chatterjee issued a report to investors this week analyzing the company’s latest earnings report. They continue to remain neutral on the stock, citing concerns about the appeal of a mass market electric vehicle, which Tesla Motors Inc (NASDAQ:TSLA) is planning for the future. The analysts did raise their price target from $42 per share to $55 per share, however.
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They said the automaker has managed to ramp up production faster than expected, which addresses one of the two concerns they citied initially when they started covering Tesla in December. Analysts at JPMorgan Securities noted that Tesla Motors Inc (NASDAQ:TSLA) reported stronger productions and deliveries than expected during the quarter.
The company delivered 4,900 units during the quarter, compared to their expectations of 4,650 units. They also note that increasing production allowed Tesla Motors Inc (NASDAQ:TSLA) to deliver more vehicles because its long wait list translates production into instant deliveries. The analysts said that Tesla has now ramped to a production run-rate that is sufficient to meet its earlier 20,000 vehicle guidance for all of the calendar year.
Tesla Motors “Has Its Work Cut Out For It”
Tesla Motors Inc (NASDAQ:TSLA) has said that it plans to reach a 25 percent gross margin by the end of the year, excluding the sale of its emissions credits, but JPMorgan Securities analysts said the automaker “has its work cut out for it.” When removing the sale of emissions credits from the company’s first quarter results, the margin is only 5.7 percent. Thus, they said they’re now looking for Tesla’s margins to ramp up in the next quarter.