Why Tesla Earnings Can Bring Analysts and Investors Back to the Table

Tesla Motors Inc. (NASDAQ: TSLA) reported strong results in its most recently quarterly filing, and investors have fallen in love with this stock again. The electric car maker posted an adjusted diluted loss per share of $0.58 on adjusted revenues of $1.24 billion. In the same period a year ago, the company reported adjusted earnings per share (EPS) of $0.02 on revenues of $932.35 million. Third-quarter results also compare to the consensus estimates of a per-share loss of $0.50 and $1.26 billion in revenues.

The carmaker built 13,091 vehicles in the quarter, including a few of the carmaker’s new Model X crossover sport utility vehicle (SUV). Tesla delivered 11,603 vehicles in the quarter, slightly above its estimated deliveries of around 11,500. The company directly leased 494 cars to customers in the first quarter, worth $45 million in aggregate value.

Tesla says it plans to build 15,000 to 17,000 vehicles in the fourth quarter, which will result in deliveries of 50,000 to 52,000 units for the full year. The full-year target for deliveries was lowered a bit at the end of the second quarter from a previously announced 55,000 units to a new range of 50,000 to 55,000 units. Deliveries are forecast at 17,000 to 19,000 units for the fourth quarter.

Following the release of the report, Credit Suisse weighed in on the brainchild of Elon Musk and has an Outperform rating with a $325 price target, implying an upside of 42.5% from the current price level.

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The brokerage firm had this to say on the outlook:

Tesla guided to 17k-19k unit deliveries in the fourth quarter, holding the bottom-end of guidance (we estimate that the majority of investors we spoke to in the last few weeks thought guidance would be lowered). Model X production should reach “several hundred per week” sometime in December. Other important outlook statements were that Model X signature reservations are converting to orders at a higher rate than Model S in 2012, gross margin will only be down roughly 100 basis point’s sequentially in the fourth quarter and should be at 30% w/in 18 mths, Capex will be “clearly lower” in 2016, and Energy Storage production will begin in earnest in early 2016 (at Gigafactory).

A few analysts weighed in on Tesla prior to earnings, and the sentiment was fairly weak:

• Barclays downgraded it to a Sell rating.
• Baird reiterated a Hold rating with a $282 price target.
• JPMorgan reiterated an Underweight rating with a $180 price target.

Shares of Tesla were trading up nearly 10% at $229.14, with a consensus analyst price target of $287.13 and a 52-week trading range of $181.40 to $286.65.

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