Electric automaker Tesla Motors Inc (NASDAQ:TSLA) is slated to announce second quarter 2015 earnings results on Wednesday, August 5, after market close. This has been an exciting year for Tesla with high volume shipments of its Model S Cars, the unveiling of Tesla Powerwall, and the planned rollout of the Model X crossover SUV in late September. Additionally, Tesla has many important milestones on the horizon. CEO Elon Musk has several plans for the company, from next year’s release of a prototype for Tesla’s modestly priced Everyman model to advances in the construction of Tesla’s $5 billion Gigafactory battery facility in Nevada to the expansion of Tesla’s emerging energy storage business.
According to Tesla’s most recent production figures, the company has shipped a record number of Model S cars this quarter marking a 52% increase over the same quarter last year. Furthermore, Tesla has sold 21,537 vehicles in the first half of 2015. However, with a goal to deliver 55,000 vehicles by the end of 2015 (two thirds more than the 2014 target), investors are wary that Tesla may not maintain its sales momentum to meet its production goals. If the company meets this projection, it would mark a 74% year-over-year growth in vehicle sales, up from a 41% increase in 2014. Moreover, there is the concern that Tesla may further delay the release of Model X, so investors are hoping Tesla will provide more details on production start dates in today’s earnings report. Tesla may also give details on its operations in China and on cyber-security following the hacking of a Jeep sold by Fiat Chrysler.
Wall Street anticipates the company to post a loss of ($0.59) per share on $1.17 billion in revenue, a dramatic fall from $0.11 earnings per share but up from $857.51 million in revenue from the same quarter last year. Net losses are forecast at $117 million, representing an wider gap from the $61.9 million loss last year. The combination of increasing revenue and falling profits should not come as a surprise given large increase in spending on Tesla’s various operations and developments.
Baird analyst Ben Kallo weighed in on Tesla on August 4, maintaining a Buy rating on the stock with a $335 price target. Kallo does not seem to be worried about demand for Model S, noting, “We think demand for the Model S will remain strong throughout 2015 in the U.S. and Europe. Additionally, [Tesla] has several significant milestones coming up over the next 18 months. Tesla continues to advance its technology, which allows for greater range, better performance and increasing access into a broader addressable market.” Kallo also believes Tesla will outperform the Street consensus: “Street estimates are likely low for TSLA’s full year profitability. TSLA indicated during its Q4:14 report it would “achieve a significantly higher level of non-GAAP profitability, in 2015, although consensus EPS estimates for 2015 are ($0.08), versus our estimate of $0.55 and 2014 EPS of $0.14. We believe TSLA is well positioned to hit its targets given operating efficiency improvements combined with cost reductions and increasing vehicle production.” Kallo added, “I think you bet on Elon Musk,” and emphasized how the real power of Model X is yet to be unveiled, stating, “The launch of a the Model X will increase TSLA’s brand value and help solidify TSLA as a long-term investment as this will be the third electric vehicle successfully launched by the company.” Kallo concludes, “This is the wrong time to pull out of the [Tesla] stock.”
Ben Kallo has rated Tesla a total of 35 times, earning a +32.9% average return when measured over a one-year horizon and no benchmark.
On the other hand, UBS analyst Colin Langan downgraded Tesla to a Sell on July 23 and set a price target of $210. Langan commented, “Even if we credit TSLA with reaching target margins, assume limited dilution despite capacity needs, & assume it trades at 25x PE in 10 years, the current price implies deliveries of >1.5m vehicles in 10 years plus full utilization of storage capacity; both are unlikely in our view.” Tesla Energy also released estimates of $800 million worth of orders for its batteries, however Langan believes “This pace is misleading as customers did not put down deposits, so these are just solicitations of interest.” Moreover, Langan slashed his earnings estimates for Tesla for 2015 and 2016 due to increasing operating costs and R&D from new mass-market Model 3 investments and battery advances.
Colin Langan has rated Tesla a total of five times since 2014, earning a +2.5% average return when measured over a one-year horizon and no benchmark.
Out of 12 analysts polled by TipRanks, 7 analysts are bullish on Tesla, 3 are bearish, and 2 are neutral. The average 12-month price target for Tesla is $311.00, marking a 16.85% potential upside from where the stock last closed. On average, the all-analyst consensus for Tesla is Hold.