Tesla (TSLA): Deliveries Not Seen As Good Proxy for Demand; Dougherty Comments Ahead of Q2 Results

Dougherty & Co maintained a Buy rating on Tesla Motors (NASDAQ: TSLA) with a price target of $325. Analyst Andrea James discussed Q2 results, expected on Thursday, July 31.

"We are expecting an in‐line Q2 with 7,500 deliveries and a reiteration of full year guidance of 35,000 deliveries. We are not expecting a major beat on the quarter, as Tesla remained cell‐constrained on production in Q2," said James.

"We believe that the buy side is expecting a marginally profitable quarter on about $780mm to $800mm in revenue. Sell‐side estimates sweep a wide range, once again. We’re modeling a $0.05 loss on $778mm in revenue. Street EPS estimates range from a $0.05 loss (D&Co) to a $0.22 profit (BofA), averaging $0.04. Street revenue estimates range from $740mm (Baird) to $933mm (BofA), averaging $811mm. EBITDA estimates range from $2mm (JPM) to $83mm (BofA), averaging $47mm. D&Co expects EBITDA of $12mm, or $49mm adding back non‐cash stock‐based compensation expenses," she continued.

James doesn't see deliveries is not a good proxy for demand, and she believes the Street is confused over this matter.

"Tesla’s goal is to stimulate just enough demand to stay ahead of production and to balance its global wait time for a car so that customers wait no longer than one month. Global wait time for a car is about four months, which tells us that demand has been growing faster than Tesla has been able to increase its own production. In its Q2 report, we expect Tesla to report on its progress against reducing global wait times," she added. "Tesla can pull many demand levers that it is not currently pulling. It does not make sense for Tesla to over‐stimulate demand so long as its production capacity is limited. Because the other automakers are fully penetrated, their operations should be analyzed differently from Tesla’s. Indeed, Tesla has only scratched the surface on penetration."

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Shares of Tesla Motors closed at $222.49 yesterday.

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