Tesla reported its second quarter financial results on Wednesday. And while the company beat earnings per share expectations and met revenue expectations, it cut its outlook for vehicle deliveries.
The electric car maker now expects to ship between 50,000 and 55,000 cars this year, which suggests the ultimate number will be lower than managements original forecast for 55,000 deliveries. This delivery number was a point of emphasis for many investors.
Tesla shares are down 6.5% after the news.
Analysts reactions were mixed. Of the seven analysts notes reviewed by Business Insider, 4 were bullish with an “outperform” or “buy” rating. Two analysts were “neutral,” while Bank of America Merrill Lynch is down on the stock with a “sell” rating.
Below are some details on what they had to say:
Price Target: $US360
Comment: 'The more encouraging fact, which will likely be overlooked in the coming days (although it should really not be), is that management continues to strive for perfection and prefers quality over production ramp speed (e.g. it equated the Model X to a 'sculptural work of art, but a very tricky thing to get right'). Demand is still very strong (CEO Musk repeated that Tesla has 'so many advanced orders on the X, that this won't be an issue in the early days') and Tesla management remains 'highly confident of a steady state production and demand of 1,600 to 1,800 vehicles per week combined for Model S and Model X,' which implies delivery of ~85K Models S/X combined in 2016 (est. 50 weeks).'
Price Target: $US335
Comment: 'On the positive side, Q4 production ramp risk is reduced, and management confirmed initial Model X deliveries are on track. Long-term growth is intact, and we would be buyers ahead of the Model X configuration/reveal this month.'
Price Target: $US325
Comment: 'Demand growth was the key uncertainty coming into 2015 and, in our view, Tesla is passing with flying colours, largely due to the major improvements they have made across the Model S lineup (which by definition also improve the Model X). With Energy Storage emerging as a significant secondary revenue stream and Model X launch now appearing imminent, we believe the stock is much cheaper today than when the valuation was at similar levels a year ago.'
Price Target: $US320
Comment: 'Net net, we do not view the change to this year's delivery target or the steady state production rate for 2016 as negative to the equity story. Instead we would recommend investors buy the stock on any weakness. As per with the fine tuning to vehicles ahead of launch, Tesla's own target recalibration should result in a better and more dependably product in the medium term. We don't believe many investors own Tesla based on 6 or even 12 month sales/earnings metrics. Nothing which we heard yesterday changes the picture materially when looking to 2017 and beyond. We believe it is better that Tesla prioritises quality over quantity as it introduces new models and continues to ramp production.'
Price Target: $US234
Comment: 'The 2015 volume cuts are driven by launch issues which have pushed out the ramp of the Model X and to some extent could interfere with Model S volumes. The later ramp is also likely to affect 2016 although Tesla did lower its overall Model S/X capacity assessment at full production. While we have only made slight changes to our volume forecasts, the negative for us is worsened visibility given the disruptive potential of the launch.'
Rating: Sector Weight
Price Target: N/A
Comment: 'While we still believe in Tesla's longer-term path, in critical, fast-ramping periods like this, we cannot help but acknowledge that near-term missteps could be viewed as a reflection of the company's ability to execute in the longer term. We still believe in Tesla's innovative prowess and its ability to drive toward profitability in three to five years, which is likely underappreciated; however, given the current and potential future challenges it faces in ramping Model X, now and through the end of 2015, we would look for a better entry point before getting more constructive.'
Price Target: $US180
Comment: 'We continue to expect both consumer pull and regulatory push for auto fuel efficiency to be met primarily with downsized, turbocharged internal combustion engines on lighter frames. Therefore, in our view, electric vehicles could remain more niche than mainstream over the foreseeable future.'