Tesla Inc TSLA's first-quarter report Wednesday had multiple data points for both bulls and bears to highlight, according to KeyBanc Capital Markets.
The Analyst
KeyBanc's Brad Erickson maintains a Sector Weight rating on Tesla's stock with no assigned price target.
The Thesis
Bullish investors will be happy that Tesla's earnings report showed the following, Erickson said:
- The company is unlikely to need to oversee a capital raise this year.
- GAAP profitability and positive cash flow is likely in the bottom half of 2018.
- Long-term Model 3 gross margin targets were raised to the high-20s by late next year.
- Model 3 reservations were maintained at 450,000-plus, and 10,000 deliveries were completed so far.
On the other hand, bears would point out:
- Tesla CEO Elon Musk's mishandling of analyst questions during the conference call.
- Model 3 production targets were pushed back for the fourth time since production started.
- Capital expenditure reductions should yield a slower push beyond 5,000 Model 3 units per week.
Tesla's stock appears to be "a bit oversold" due to a low Model 3 profitability bar for the company to achieve, a "solid and likely improving" demand environment and encouraging production announcements in the coming quarters, the analyst said
Longer-term valuation sensitivity and an "unfavorable" conference call justifies a neutral stance on the stock, according to KeyBanc.
Price Action
Shares of Tesla were trading lower by 6.69 percent before the open Thursday.
KeyBanc Lowers Model 3 Estimates Ahead Of Tesla's Q4 Report
What Wall Street Expects To See In Tesla's Q1 Earnings
Photo courtesy of Tesla.
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