Baird’s Ben Kallo believes that the Q4 results could be a de-risking event for Tesla Inc TSLA in the near term and recommends buying the shares.
The analyst maintains an Outperform rating on the company, with a price target of $338.
Expectations From The Call
“We expect updates on the Model 3 and Gigafactory production ramps on the call, which we believe will drive shares higher,” Kallo mentioned.
Kallo now expects 25,000 Model 3 deliveries in 2017, and expressed confidence that Tesla would be able to ramp production, although the company was unlikely to give a specific Model 3 guidance.
In addition, the analyst expects less focus on the SolarCity Corp SCTY acquisition, “although there may be short-term noise as expectations are calibrated.”
Estimates
For fourth-quarter 2016, the estimates are above the consensus expectations at $2,241.3 million in non-GAAP revenue and EPS of $(0.07), while the gross margin estimate of 23.8 percent is below consensus.
For 2017, the non-GAAP revenue estimate is $10,719.3 million, with gross margin of 24.4 percent and EPS of $(0.66).
“Given the broad range of expectations for SCTY project deployments and the Model 3, there are a wide range of estimates for Q4 and 2017, which could cause short-term noise as expectations are calibrated,” Kallo explained.
The analyst believes that any updates regarding the Model 3 production ramp, Tesla Energy and potential new product details could drive the stock up.
At last check, shares of Tesla were up 2.19 percent at $267.82.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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