Tesla Motors (TSLA) Q1 Results Could Be Lackluster, But Buy Shares Ahead of Upcoming Catalysts - Baird

April 7, 2014 8:11 AM EDT
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Baird analyst Ben Kallo reiterated an Outperform rating and $275 price target on Tesla Motors (NASDAQ: TSLA) ahead of Q1 results.

Kallo comments, "Although TSLA's earnings date has not been released, we believe the recent pullback largely has weak results priced in. We are expecting 6,400 deliveries and a solid production number, but are more cautious heading into what will likely be an uneventful quarter. That said, we believe TSLA is well positioned for positive results in Q2 through Q4, and remain bullish in the longer term due to several upcoming catalysts."

The analyst notes one-time accrual for undercarriage reinforcement will impact results, but likely less than some estimates and should be a long-term positive for the company. They see non-GAAP revenue of $645M and non-GAAP EPS of ($0.05) vs. consensus of $703M and $0.11.

The firm also cautions investors on deliveries as Norwegian registrations may have expectations too high. " Although the recent announcement of 1,493 Model S registrations in Norway shows a positive demand trend, the registrations likely do not represent the timing of deliveries, which may have already occured or could occur in future quarters," he said.

Kallo sees production number should be solid as TSLA continues to ramp manufacturing and sees several catalysts ahead which should drive the stock higher. "Upcoming catalysts include gigafactory site selection, partner announcements and ground breaking, the marketing campaign for the Model X, as well as updates on TSLA’s second production line and global demand trends," Kallo said.

Lastly, the firm expects additional information about the Chinese market as deliveries are scheduled to begin in the near term.

For an analyst ratings summary and ratings history on Tesla Motors click here. For more ratings news on Tesla Motors click here.

Shares of Tesla Motors closed at $212.23 yesterday.

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