Just ahead of posting financial results for the first quarter of fiscal year 2015 (1QFY15), Tesla Motors Inc (NASDAQ:TSLA) is facing heat from various Wall Street analysts, who have lowered their estimates for the company.
After conservative estimates announced by Adam Jonas of Morgan Stanley last week, analyst at JPMorgan, Ryan Brinkman, has now provided commentary on the electric vehicle (EV) maker. The analyst has cut target price on Tesla stock from $175 to $165. The stock is currently trading at $205, down 1%, as of 1:25PM EST.
The sell-side research firm has assigned an Underweight rating on Tesla stock, and has maintained a bearish stance for the next quarters, eyeing low sales for Tesla’s upcoming sport utility vehicle crossover, Model X. The sell-side firm lowered estimates for the automaker, considering unfavorable exchange rates, increased operating expenses, and sluggish Model X sales.
Model X delivery concerns were raised by Mr. Jonas, who predicts the automaker to sell 100 units of EVs in the third quarter, and 3,000 units in the fourth quarter. However, such estimates are too conservative compared to what the automaker announced earlier in February during the 4QFY14 earnings call. The company announced that it has witnessed strong demand for its EV portfolio, as already around 20,000 units of Model X and 10,000 units of Model S were registered for sale. The automaker also announced to launch Model X by the third quarter of this year.
Tesla Motors revealed its best quarterly sales figure earlier this month, reporting a record-high figure of 10,030 unit sales for the quarter. The automaker announced to reveal official quarterly sales figures within three days before the ending of each upcoming quarter. For the company to meet its FY15 sales target of 55,000 units, it will have to sell around 15,000 vehicles for the remaining three quarters.
One would have to wait for the end of the year to finally know whether Tesla Motors would cross or meet its annual target. However, one important factor must be noted that the automaker expects to boost sales by successful launch of the Model X. To make sure, the automaker is ready to bear slashed short-term profitability, as it plans to invest loads on Model X launch.
This is the reason many auto analysts, including Mr. Brinkman, have revised down quarterly earnings estimates, following the launch of the vehicle. For the first quarter, JPMorgan expects the automaker to report adjusted loss of $0.38 per share, higher from previous estimated adjusted loss of $0.31. However, such estimates are still better than the consensus adjusted loss of $0.53 per share, according to Bloomberg data.
Out of the 22 analysts who cover Tesla stock, with a 12-month consensus target price of $257.28, 12 rate it a Buy and seven have given it a Hold rating.
JPMorgan has provided an update on two of the leading Detroit automakers, namely, Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM), today. The sell-side firm reiterated bullish stance on both stocks. It maintained an Outperform rating on Ford stock and General Motors stock, maintaining a target price of $19 and $46, respectively.