A handful of analysts weighed in on Tesla Motors Inc (NASDAQ:TSLA) on May 5th ahead of the company’s first quarter 2015 earnings report, slated to be posted on May 6th after market close. Wall Street expects Tesla to post a loss of ($0.50) a share and $1.04 billion in revenue, down from $0.12 earnings per share but up 46% in revenue from the same quarter a year prior.
Tesla has received some flack recently due to the company’s struggling sales in China. However, Jefferies analyst Dan Dolev isn’t fazed by this, believing that the stock could gain as much as 50%.
Giving Tesla a Buy rating with a $350 price target, Dolev thinks that “Worries about China sales are overblown as detailed consumer survey uncovers TSLA could sell at least 500K cars/year by 2020 in North America/Western Europe alone.” He added, “With 68% of all respondents considering alternative fuel vehicles and 7% considering a Tesla, selling ~500K cars/year by 2020 is feasible, and would still imply less than 0.5% share of expected 2020 global light vehicle sales.”
Dan Dolev currently has an overall success rate of 70% recommending stocks and a +11.7% average return per recommendation.
Investors are also concerned about Tesla’s increase in spending on production and will be looking to see if the company plans on raising new capital to do so.
On the other hand, Tesla got investors exited when the company estimated an early delivery of 10,030 vehicles for the first quarter, marking a significant growth from 6,457 the same quarter a year prior. With that said, Tesla, like many other companies, has faced foreign currency headwinds in recent quarters. The adverse effects of the strong U.S. dollar is expected to continue in Q1. Consequently, Tesla’s revenue growth will most likely not correlate with the percentage growth in vehicle deliveries.
Tesla also announced plans to enter the energy storage business on April 30th by releasing a battery, known as Powerwall, which will provide energy to homes and buildings.
Tesla CEO Elon Musk described the battery, stating “that [it] charges using electricity generated from solar panels, or when utility rates are low, and powers your home in the evening. It also fortifies your home against power outages by providing a backup electricity supply.”
Since Powerwall was launched, Morgan Stanley analyst Adam Jonas believes “investors appear more willing to include the electric utility TAM in the Tesla valuation discussion.” The analyst, who maintained an Overweight rating on Tesla with a $280 on May 5, thinks that Tesla’s energy storage solution will take over both the vehicle sector and electric utility sector, which are both worth trillions of dollars. He noted, “each 1 million units of Powerwall sales (assuming a price $350/kWh, 30 percent gross margin, capitalized at 10x) would be worth around $10bn, $72 per TSLA share (145mm shares), or around 30 percent of Tesla’s current share price.”
Adam Jonas has an overall success rate of 59% recommending stocks and +18.3% average return per recommendation.
On average, the top analyst consensus for Tesla on TipRanks is Moderate Buy.