Credit Suisse Hikes Tesla Target To $280 After Delivery Miss, Expects Strong Back-Half Of 2016

Tesla Motors Inc TSLA reported a slight miss in 1Q volumes, but maintained its full-year guidance. Credit Suisse’s Dan Galves maintained an Outperform rating for the company, while raising the price target from $240 to $280.

Volumes

Tesla reported its Q1 deliveries at 14,820, short of its 16,000 guidance. The company sold 12,420 Model S and 2,400 Model X vehicles. Tesla indicated that the shortfall had resulted mainly from significant Model X component shortages in January and February, which had lasted longer than expected.

Although there was a substantial pickup in production in March, it was too late to meet the guidance. This, however, gave management confidence to reiterate its full-year guidance of 80k-90k units, analyst Dan Galves said.

Pressure To Ease

Galves mentioned the main points of the press release as:

• Model X production reached 750 per week by the end of the quarter. Tesla’s press release indicates that the company should be able to meet the target of exiting Q2 at a rate of 1,000 per week.
• Vehicle orders significantly exceeded deliveries in 1Q. “Between that and remaining Model X pre-launch backlog still to be filled, we should see a substantial uptick in deliveries during Q2,” the analyst wrote. The Q2 estimate has been raised from 18k to 19.5k, while the FY16 estimate remains unchanged at 82k.

“Model X production is on-plan, everything is in place for that to happen. We expect some evidence of improvement in Q2, but much more meaningfully in the back-half as overall production increases and Model X inefficiencies diminish,” the Credit Suisse report noted.