Wall Street Weighs In On Tesla's Earnings Beat

Tesla Inc TSLA shares closed up 6.5 percent on Thursday after the company reported a smaller-than expected Q2 earnings loss and reiterated its Model 3 production guidance.

A number of Wall Street firms weighed in on the polarizing stock following the report. Here’s a sampling of what they had to say.

Downside Potential

Goldman Sachs analyst David Tamberrino said the surprisingly strong quarter doesn’t change the fact that it will have difficulties in meeting its Model 3 targets.

“We see downside potential to the Model 3 launch curve, which we expect will likely drive disappointing Auto gross margins, and further cash burn,” Tamberrino wrote.

Loup Ventures analyst Gene Munster said investors may be overestimating Tesla’s capabilities in the short-term.

“We caution that it will take time for the Tesla story to unfold, and that there will be disappointments along the way, but Tesla’s Jun-17 quarter results and outlook around production and demand suggest the company is on a track to be a significant beneficiary in the global paradigm shift to EV and autonomy, all while producing affordable vehicles,” Munster wrote.

Hitting Targets

Baird analyst Ben Kallo said Tesla’s cash balance, demand commentary for all models and Model 3 margins were all better than expected.

“Although TSLA is now in ‘production hell,’ we recommend investors own shares into the Model 3 ramp, which should be a several-month period and coincide with positive catalysts as cars are delivered and reviewed, and TSLA shows investors it can ‘make money’ on the Model 3.” Kallo wrote.

Deutsche Bank analyst Rod Lache said he liked management’s tone on the conference call.

“Tesla management sounded very confident in their level of preparedness/ability to achieve production targets,” Lache wrote.

See Also: Tesla Earnings Beat Cost Shorts $300 Million

Oppenheimer analyst Colin Rusch is still waiting for more details from Tesla on its autonomous vehicle technology.

“We believe the long-term thesis on TSLA depends on the successful launch of fully autonomous vehicles, but limited information is available on the progress being made nor on testing results for Level 3-5 autonomy,” Rusch wrote.

Ratings And Targets

Even after the encouraging report, Wall Street remains divided on the popular stock:

• Goldman Sachs has a Sell rating and $200 price target.
• Baird has an Outperform rating and $368 price target.
• Deutsche Bank has a Hold rating and $240 price target.
• Oppenheimer has a Perform rating.

The stock closed at $347.09 per share.