We Would Own Tesla Motors Stock Heading Into Q2 Earnings: Baird

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Tesla Motors Inc (NASDAQ:TSLA), which will soon come out with its second quarter earnings, have retained an Outperform rating from Baird Equity Research analyst Ban Kallo.  The analyst expects the electric car maker to report strong production and deliveries for the quarter.

We Would Own Tesla Motors Stock Heading Into Q2 Earnings: Baird

Also, the report expects increased margins backed by the increase in price for Model S along with production efficiencies, and breakpoints from suppliers. The analyst says “We would own the stock heading into Q2 earnings.”

Tesla 2Q estimates

For the second quarter, analysts from Baird Equity expect Non-GAAP revenue of $395.3 million compared to the consensus estimate of $397.3 million. Non-GAAP EPS is expected to come in at ($0.26) against consensus estimate of ($0.18). The difference between the consensus and estimate provided by the analyst is mainly due to “modeling of TSLA’s new financing product.”

Analysts expect improvement in the gross margins, and estimate Non-GAAP gross margin of 15.8 percent, which is lower to the consensus estimate of 19.4 percent. The price increase of the Model S along with other factors including production efficiencies, and breakpoints from suppliers will boost margins for Tesla Motors Inc (NASDAQ:TSLA).

Tesla to achieve gross margin target

The report is confident that the company will achieve its target of 25 percent gross margin in the fourth quarter, and for the second quarter, gross margin of more than 10 percent will “be a positive for the stock.”

Tesla Motors Inc (NASDAQ:TSLA) is expected to surpass its Model S deliveries target of 21k vehicles for 2013. For the second quarter, Kallo has modeled around 5000 Model S produced and delivered, but the “internal models and channel checks” are resulting in an estimate of 5550 vehicles.

Items to watch for

Tesla Motors Inc (NASDAQ:TSLA) will hold its earnings call on Wednesday at 4:30 p.m. CDT. Analysts will be looking forward to an update about deliveries in Europe and Asia, and information on the company’s supercharger. European deliveries were expected to start in July, but Kallo believes that actual deliveries might have been delayed to August, while for Asia deliveries will start later this year. For both Europe and Asia, Kallo expects strong demand.

Baird Equity Research maintains a price target of $118 and reiterates ‘Outperform’ rating for the Tesla Motors Inc (NASDAQ:TSLA).

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