Analyst Sets Expectations on Tesla (TSLA) Ahead of Q2:18 Delivery Release


As if Tesla’s (NASDAQ:TSLA) Model 3 production ramp-up hasn’t already been in the spotlight enough, the electric-car giant’s vehicle production and deliveries will be scrutinized next week when management shares its quarterly update on vehicle production and deliveries.

Baird analyst Ben Kallo expects the focus will be on exit rate Model 3 production and total Model 3 production in June, and believes the stock could trade up if TSLA approaches its 5k/week production target. Importantly, the analyst expects there will be a larger number of vehicles in the channel compared to previous quarters given the back-ended production ramp during Q2.

Kallo opined, “We think TSLA may deliver ~25k model 3 vehicles, with more vehicles in the channel, though we believe the focus will be on production as opposed to total deliveries. Consensus estimates for Q2 model 3 deliveries may be too high, particularly given our belief there could be a larger-than-normal delta between production and deliveries due to the ramp during the quarter. That said, Elon Musk’s recent email could indicate the company is tracking ahead of consensus expectations.”

Furthermore, “We think there is a chance TSLA announces a pathway to continue to expand production, which would likely be a positive catalyst. We think there is an offchance TSLA could provide additional information on a potential path to further increasing production (beyond 5k/week) ahead of expectations. We believe an update on the Model 3 production timeline could be a positive catalyst.”

Net net, ahead of Tesla’s quarterly update on its production and sales volume, Kallo reiterates an Outperform rating on Tesla stock, with a price target of $411, which implies an upside of 16% from current levels. (To watch Kallo’s track record, click here)

Not everyone out on Wall Street is quite as excited regarding this electric car player’s growth potential as Kallo, considering TipRanks analytics showcase TSLA as a Hold. Out of 22 analysts polled in the last 3 months, 7 are bullish on Tesla stock, 9 remain sidelined, and 6 are bearish on the stock. With a potential downside of nearly 14%, the stock’s consensus target price stands at $302.82.

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