Stifel Trims EPS Est. on Tesla (TSLA) Ahead of Q3 Report; Sees Headwinds from Drivetrain Warranty Expense

Stifel is out with a Q3 preview for Tesla Motors (Nasdaq: TSLA), which is expected out on November 5th after markets close. The firm has Tesla at Buy with a price target of $400.

Analyst James Albertine is cutting his EPS estimate from $0.04 to a loss of $0.03 per share. The Street is looking for a breakeven result.

Albertine noted that the cut outlook stems from a roughly $9 to $10 million headwind related to retroactive drivetrain warranty expenses incurred during the quarter, which equates to a roughly $0.07 negative EPS impact.

We also believe short-term production/delivery guidance may fall short of expectations, given two weeks lost during 3Q14 for a Model X body assembly line changeover, and vehicle-in-transit headwinds as TSLA works to fill international demand. That said, we think the focus should remain on the timing of TSLA's progression up to and beyond 1,000 units produced/week, order backlog for the Model X, and ATP trajectory in light of recent feature announcements, Albertine noted.

Albertine's FY14 EPS target is cut from $1.15 to $0.96 with expectations that the company will miss its 35,000 unit delivery target for 2014. The analyst continued, We see upside to our model in the form of greater than expected operating leverage from higher ATPs driven by recent feature announcements (all-wheel drive, dual motors, semi-autonomous technologies), as well as secondary market opportunities for existing Model S vehicles in light of 3 to 4 month order backlogs in North America.

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Tesla Motors closed at $238.66 yesterday.

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