Tesla (TSLA) Rolls Through 3Q Like the Runway Was Greased; Analyst Boosts Price Target

On days like today, when the entire stock market is under pressure, you must have done something right to see your stock rise over 6%. And Tesla (TSLA) definitely did something right. The electric car giant managed to report robust third-quarter numbers that smashed expectations out of the water. More importantly, Tesla delivered its first quarterly profit and positive free cash flow fueled by higher-margin Model 3 sales.

In reaction, Oppenheimer analyst Colin Rusch reiterated an Outperform rating on Tesla stock, while boosting his price target to $418 (from $385), which implies a 27% upside from current levels. (To watch Rusch’s track record, click here)

Tesla brought in 3Q18 revenue of $6.82 billion, beating consensus estimates of $6.05 billion. The electric automaker earned $2.90 per share, well above Wall Street’s consensus estimate oof ($0.03)E. Auto revenue was $6.1 billion, Energy Generation & Storage revenue was $399 million, and Service/ Other revenue was $326 million.

Rusch opined, “With TSLA delivering positive cash flow in 3Q18 well ahead of expectations at $740M in FCF (vs. consensus at $180M), all eyes now turn to the 2019 debt maturities, capital needs for its China capacity expansion, and depth of demand for Model 3. With ~ $890M in convertible notes due March 2019 with a strike price of $359.87 and ~$525M due November 2019 at $759.36, we expect TSLA to hope shares trade above the March 2019 conversion price and pursue a new fixed income instrument to address capex and the November 2019 converts. TSLA also highlighted its remaining 300k + Model 3 reservations indicating it expects strong sales as it introduces Model 3 in Europe in early 2019.”

The analyst has updated his estimates and now sees FY18 revenue and adj EPS of $21.7B and ($0.36) from $19.6B and ($8.62), respectively.

The Tesla pie is almost equally split in three. Out of the 29 analysts polled by TipRanks in the last 3 months, 10 are bullish on Tesla stock, 9 remain sidelined, and 10 recommend a Sell. The consensus price target stands at $332.67, showing a nearly 3% upside from current levels. (See TSLA’s price targets and analyst ratings on TipRanks)

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