Deutsche Bank analyst, Rod Lache, reiterated his Hold rating on shares of Tesla Motors (NASDAQ: TSLA) after Q1 was a bit better than we expected w/r/t gross profit, improving 500 bps sequentially to 18.8%. The profitability of Model S/X improved to >25% vs.~20% in 4Q17 but, as expected, Model 3 experienced a significant negative gross margin.

The analyst stated "We have fine-tuned our estimates following 1Q results and updated guidance. Overall, we expect Auto gross margins of 21% in 2018 (25% for Model S & X, with M3 getting to 20% by 4Q18). We estimated cash burn of $500 MM in 2Q18 (total cash position of $2.2 bn, the lowest point in the yr but still well above TSLA’s $1.0-$1.5 bn minimum cash level), with positive free cash flow by 4Q18". The net reaction is no change to the price target of $365 or rating as investors wait and see if the company can lock in on its rapidly changing targets.

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Shares of Tesla Motors closed at $301.15 yesterday.