Tesla (TSLA) PT Raised to $320 at Evercore ISI; 500K Unit Goal 'Ambitious' But Not 'Impossible'

Evercore ISI analyst George Galliers reiterated a Buy rating and lifted his price target on Tesla Motors (NASDAQ: TSLA) to $320.00 (from $310.00). Galliers said while its 500k units target for 2018 is "ambitious" it should not be viewed as impossible or unachievable.

At c500k units p.a., Tesla would only be in the Top 25 OEMs globally. And Tesla’s production would account for c50bps of global light vehicle production, barely moving the needle.

Galliers said while Tesla has been criticized by some for an apparent lack of delivery, they view view Tesla as a “Top Achiever” and believe shortfalls are a function of aggressive objectives. "Those who are critical of Tesla’s achievements should take a step back and consider what the company has delivered to date," he said.

The analyst said they don't believe delays in the launch and ramp-up of the Model X are the “best” proxy for the Model 3. The Model S was delivered on time and the Model X only 9 months late, he highlights. "Delayed product introductions are not unique to Tesla but also occur at traditional OEMs," he said. "Unlike Tesla, most OEMs don't provide details on when products will come to market, making it difficult to determine from the outside whether products are on track or falling behind."

The company has Tesla delivering c394k units in 2018, approximately 100k units short of the targeted production of c500k units. "Assuming that by the end of 2018 Tesla is running at an annualized production rate of c11k units per week, then the shortfall equates to approximately one quarter behind schedule," he comments. "Tesla’s ability to produce 500k units in 2018 is far from a foregone conclusion. In fact it will be an immense challenge. As a result, we believe it necessary to exercise some degree of caution." They believe concerns over order cancellations are unwarranted.

They expect Tesla to raise capital, and the company confirmed the accelerated Model 3 ramp "will likely require some additional capital". They believe Tesla is determined to “self-fund” where possible. Thus, they expect any capital raise this year to not materially deviate from the $825mn incremental opex and capex in Tesla’s revised guidance. "Looking to 2017, further capital raises may be necessary depending on the pace of Model S and Model X deliveries," he said. "With volume mass production coming sooner rather than later, we believe the Tesla equity story is stronger and more tangible than ever."

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 $208.96 yesterday.

You May Also Be Interested In

• HSBC Maintains Tesla (TSLA) at Reduce
• Walmart (WMT) PT Raised to $86 at KeyBanc
• Wells Fargo (WFC) PT Raised to $67 at Citi