Oppenheimer After Meeting Tesla IR: Everything's Great

Oppenheimer’s Colin Rusch maintained an Outperform rating for Tesla Motors Inc TSLA, with a price target of $340, stating the company is on track to achieving the targeted production levels and generating positive cash flows.

Model X

A meeting with Tesla Motors officials revealed that the company’s Model X is ramping well with current production at “several hundred per week.” This indicates that the company is on track to reaching a level of 1,000 Model Xs per week by the end of 2Q16, Rusch stated.

“With FY16 guidance at 80-90K vehicle shipments in 2016, we believe Model X production velocity at such levels by midyear is critical to hitting FY guidance,” the analyst added.

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Other Expectations

Cusch believes that the Tesla Motors may introduce upgrades to its older modes, besides unveiling its Model 3. The company aims to produce its first cells out of the Gigafactory by the end of this year.

Cusch believes that Tesla Motors stands apart from its peers in terms of battery design and pack engineering. The company is leveraging its buying power to enhance its technological strengths.

The company expects to generate core operating cash flows of $700-$800 million in 2016, besides pulling down $1 billion from its ABL to fund capex spending during the year. “We believe that if TSLA can demonstrate such operating leverage this year, future investments are likely to be funded by operations,” the Oppenheimer report mentioned.