Stifel Affirms Tesla (TSLA) at 'Buy' Following Q4 Results, Guidance; Model 3 GM Questions Remain

Stifel reaffirms its Buy rating and $325 price target on Tesla Motors (Nasdaq: TSLA) following Q4 results and outlook issued Wednesday night.

Tesla posted a Q4 adjusted loss of 87 cents per share, versus a 4 cents per share loss expected by Stifel. Results included 17,478 deliveries, 14,037 units produced, and 20.9 percent automotive gross margin (Stifel was modeling 23.8 percent), which excludes $8 millin ZEV credit sales.

Analyst James Albertine offered the following thoughts about the quarter: Initially we were positively surprised by TSLA's reiteration of guidance which includes, (a) 80-90k units delivered in 2016, (b) timing related to the Model 3 prototype release and Gigafactory opening, and (c) gross margins of 30% for the Model S and 25% for Model X by year end '16. We also noted customer deposits ticked higher sequentially, perhaps suggesting demand in tact. Our key questions for management involved further detail on free cash flow expectations, capital expenditure outlook ($1.5 bn vs. our current $1.25 bn model) and need to raise additional capital in FY16 near term (understanding management noted would not need to go to outside sources). We would also be interested in hearing how we should think about modeling Model 3 gross margin based on launch timing, production ramp, Gigafactory benefits, and additional launch costs expected.

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