Evercore ISI Remains Sidelined on Tesla (TSLA) Stock as ‘Small Beat Does Not Change the Big Picture’


Tesla (TSLA) provided investors a glimpse into its vehicle production and deliveries Tuesday morning in a quarterly update on the metrics. Tesla produced 80,142 vehicles in total, up 50.3% from the previous quarter, including 53,239 Model 3 units, an 86% increase from Q2 and within guidance of 50,000-55,000. In addition, Tesla succeeded in its goal of delivering more vehicles than it produced in the quarter, despite concern that logistics challenges had become a barrier last month. The company delivered 83,500 vehicles: 55,840 Model 3, 14,470 Model S, and 13,190 Model X.

Yet, shares of the electric-car giant tumbled nearly 9% since the announcement. Evercore ISI analyst George Galliers tries to explain why: “In aggregate, the deliveries beat equated to an incremental 6k units. Under a “Bullish” scenario, we believe this could equate to an additional $488Mn of revenues and $105Mn of gross profit. Though positive, we don’t have conviction that this is sufficient for Tesla to achieve its GAAP profitability target for Q3. As a result, we see little change to the big picture.”

“Tesla produced 53.2k units during the quarter. While this was above the mid-point of the company’s guide (50 to 55k units), the exit rate of >5.3k units in the final week of September does not suggest notable improvement vs. July. Unlike in some previous releases, the company did not provide commentary to suggest any near-term ramp from here […] Based on our tour of Freemont (early August), we believe downtime as opposed to installed capacity remains the constraining factor,” the analyst continued.

Net net, Galliers reiterates an In Line rating (i.e., Hold) on TSLA, while revising the price target to $299 (prior $301), which implies a potential upside of 7% from where the stock is currently trading. (To watch Galliers’ track record, click here)

Wall Street backs Galliers’ caution here, as TipRanks analytics reveal TSLA as a Hold. Based on 26 analysts polled in the last 3 months, 6 rate a Buy on Tesla stock, 10 maintain a Hold, while 10 issue a Sell. The 12-month average price target stands at $315.57, marking a 12% upside from where the stock is currently trading. (See TSLA’s price targets and analyst ratings on TipRanks)

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