Tesla shares are surging following the company’s Q3 earnings announcement on Tuesday afternoon.
The auto company reported a net loss that was a bit wider than expected, while revenue was right in line.
At $US225 per share, the stock is up around 8% since Tuesday’s close.
Tesla is moving a healthy amount of cars. Vehicle deliveries came in at 11,603 in the third quarter, and the company expects it will deliver between 17,000 and 19,000 vehicles in the fourth quarter. Management now expects full-year vehicle deliveries will total between 50,000 and 52,000, which compares to previous guidance calling for between 50,000 and 55,000.
Notably, the company also had some good things to say about China. Model S orders “increased substantially” from the previous quarter.
Some Wall Street analysts covering Tesla are loving the news, while others remain cautious. Out of the 10 research notes read by Business Insider, 5 were bullish and 5 were relatively neutral.
But all of the price targets range from $US230 to $US450, which means everyone agrees that the stock price is going up.
Here’s some of what the pros are saying.
Price Target: $US450
Comment: 'We believe Tesla is particularly well positioned to accelerate the development of shared electric autonomous transport through the combination of several business attributes: its manufacturing of automobiles, development of software, machine learning expertise and physical fleet management ecosystem (stores, services centres,charging stations). Given the rapid pace of development of key milestones in the areas of autonomous mobility (at both a developmental stage and in the commercial market) we believe investors' appreciation of Tesla's place in the market for miles travelled has the potential to evolve significantly over the next 6 to 12 months.'
Price Target: $US400
Comment: 'We believe progress made on further Model S sales globally, the ramp in the Model X, construction of the Gigafactory driving lower battery production costs, TSLA's entry into the stationary storage business, and the further proliferation of TSLA retail stores, service centres and charging stations internationally remain key near-term catalysts. '
Price Target: $US340
Comment: 'While the complexity of its manufacturing is substantial, we note the similarity of Model S and Model X platforms aids the company's learning curve. We continue to take a conservative view on ramp with our new estimates at 77K vehicles for 2016 still below the implied target of 80K-90K. We believe hiring of new CFO Jason Wheeler, a Google vet, points to the company evolving toward the opportunity presented by software and service revenue related to transportation and power management.'
Price Target: $US325
Comment: 'Sentiment has been extremely negative since immediately prior to the Model X launch, as is usually the case when focus turns toward the short-term. We think focus can now move longer-term, given increased clarity on the Model X and Gigafactory launch, commentary on accelerating Model S / X order rates, removal of uncertainty on near term gross margins, and expectation of positive EPS in Q4 and potentially breakeven FCF early in 2016. Overall, 2016 looks to be the first year since 2013 devoid of capacity actions and major product launches… and with volume ramping and operating expense growth flattening, we see the potential for operating leverage to drive substantial increases in earnings / cash flow throughout the year.'
Price Target: $US310
Comment: 'We remain buyers of Tesla and take plenty of positives out of an in-line quarter and guidance. Tesla continues to attract significant demand for its products and we believe that the analysis into residual values which we have carried out in this report is evidence that demand is much deeper than the new products that Tesla is able to deliver.'
Price Target: $US282
Comment: 'We think there will be a continued news vacuum in the near term, causing the stock to be in limbo. We believe bears will control the narrative over the next several months, and we will look to become more constructive as catalysts get nearer, including the Model III introduction expected in March, 2016.'
Price Target: $US280
Comment: 'While we're feeling better about the trajectory to positive free cash flow, significant questions remain about Tesla's intermediate term profitability and cash flow targets as the company scales up to Model 3 and Gigafactory production. The level of capital deployment and risk taken by Tesla (including innovation in areas that are tangential to EV manufacturing, such as door closures, windshields, and seat structures) remains a significant concern. That said, we also believe that Tesla's innovations (in electric vehicles, autonomous driving, and in mobility paradigms) have potential to create significant value.'
Rating: Sector Perform
Price Target: $US280
Comment: 'Our Sector Perform rating is based on our view that Tesla is a very innovative and disruptive company with strong growth ahead via disrupting large addressable markets. But it's also a classic story stock that is difficult to value given the investment decision is often qualitative vs. quantitative. ... To that end, Tesla is essentially learning how to become a manufacturing company on the fly. While we don't have meaningful reason to doubt Tesla can eventually get to their targets, doing so in a timely matter without some growing pains could prove challenging. Failure to hit near-term objectives may not impact the long-term view, but could hold back the stock or provide a more favourable risk/reward entry point.'
Price Target: $US230
Comment: 'All factors considered, we still see only modest upside to TSLA shares which trade 10% below our price target; as such we would continue to use the natural volatility in the shares to seek a better entry point.'
Rating: Sector Weight
Price Target: N/A
Comment: '...we remain cautious given our ongoing concerns around soft Model X reservations, further risk around the Model X production ramp, and the associated implications that could have on the company's longer-term value. ...We remain a believer in the longer-term trajectory for now, but any signs of further production challenges and/or waning demand for either Model S or X could make it difficult to argue against such a re-rating. '
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