Tesla Beats Delivery Estimates, Baird Reiterates $338 Price Target

Tesla Motors Inc TSLA announced it had delivered 24,500 vehicles in Q3, beating the delivery estimate of 21,000 vehicles.

“Management expects production to continue to ramp, indicating Q4 deliveries should meet or exceed Q3 numbers. Shares should trade higher as TSLA executed on production and reiterated guidance,” Baird's Ben Kallo mentioned.

Related Link: Tesla Says It Delivered 70% More Cars In Q3 Compared To Q2

Management reiterated its H2 guidance of 50,000 deliveries, since Tesla has continued to make progress on ramping production.

Q3 was a robust quarter for the company, with deliveries rising 70 percent year-on-year and 27 percent sequentially.

In addition, Kallo noted that “an expected Q4 average production rate of 2,272 vehicles/week, provides evidence TSLA could still hit its production target of 2,400 vehicles/week by the end of Q4.”

Sustained Demand

The analyst believes the Q3 delivery mix indicates sustained demand for the Model S, although the Model X accounted for a smaller than expected mix.

Tesla reported 15,800 Model S deliveries, beating the estimate of 12,000. While the large Model S mix should drive Q3 margins, Kallo also expects it to be positive for the company, going forward.

“We believe shares will trade higher after TSLA executed on production and deliveries and we continue to recommend shares at current levels with catalysts upcoming. Catalysts include the ramp of the gigafactory, additional news around the Model 3, and potentially the Paris Motor Show,” the analyst added.

Kallo reiterated an Outperform rating on the company, with a price target of $338.

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