Tesla Motors Inc (TSLA) PT Raised By Wedbush After Facility# Stock
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Tesla Motors Inc (TSLA) PT Raised By Wedbush After Facility Tour
by Michelle JonesSeptember 25, 2013
Wedbush analysts hosted an investor tour of Tesla Motors Inc (TSLA)抯 manufa
cturing facility and were pleased with what they found.
Debate continues on whether Tesla Motors Inc (NASDAQ:TSLA) will be able to l
ive up to the high expectations investors now have for it. But the company i
s starting to convince some analysts, like those at Wedbush, who hosted an i
nvestor tour of the automaker抯 manufacturing facility this week. However, t
hey still want to see more before they become comfortable enough to rate the
stock as a Buy or better.
Tesla Motors
Wedbush still Neutral on Tesla
Analysts Craig Irwin and Min Xu issued a report with their findings from the
tour of the facility in Fremont, Calif. They remain Neutral on the company
but have increased their price target from $150 a share to $180 per share. T
hey said they are 搃ncreasingly convincedthat Tesla Motors Inc (NASDAQ:TSL
A) will meet or exceed investor expectations 搃n both the near and intermedi
ate future.br />
Tesla抯 production line could be improved even further
They said currently the automaker抯 manufacturing line is producing vehicles
揳t an impressive rate,and they believe that the company could even flex
up production further over the 500 vehicles per week rate which the company
is seeing as it exits the third quarter of the year. They believe that the p
art of the line where the trim and final assembly of the vehicle is done is
搕he limiting factorfor the company抯 production capacity. The analysts su
ggest that Tesla Motors Inc (NASDAQ:TSLA) might be able to streamline that p
rocess to improve its production capacity even further.
The analysts also said every part of production for the Model S is 搈eticulo
usly planned,including the roadmap for 25 percent gross margins, which the
company is aiming for by the end of this year. They say one example is how
the company increased its gross margins from 5 percent in the first quarter
to 13 percent in the second quarter. They note that the sequential jump in g
ross margins was brought about by the release of about 500 temporary workers
who had been budged for under the ramp of the Model S.
Tesla抯 suppliers appear to be playing a key role
The analysts also believe that Tesla Motors Inc (NASDAQ:TSLA)抯 suppliers ar
e providing it with price concessions which will contribute about 200 to 300
basis points to gross margins by the end of this year. They said that these
concessions are likely due not only to the suppliersown cost-out executio
n but also their increasing expectations for Tesla抯 future.
They also said Tesla management didn抰 refute their checks which suggest tha
t they had qualified Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) t
o supply battery sells. They believe improving battery costs due to better c
ell pricing plus tailwinds from currency could support upside for Tesla Moto
rs Inc (NASDAQ:TSLA).
Tesla抯 valuation based on 2017
The Wedbush analysts said their target is based on 30 times Tesla抯 estimate
d 2017 earnings per share of $7.55, compared to their multiple of 25 previou
sly. They discounted back four years using a 6 percent discount rate. They b
elieve valuing Tesla on its 2017 estimates is the right thing to do because
that is the first year its Generation III mass market vehicle is expected to
scale. They also said a multiple of 30 seems fair because the company is st
ill in 揼rowth mode,which leaves room for the company to keep penetrating
markets and diversifying its vehicle line to push earnings higher and higher
.
They see a number of big positives in the company抯 path to reducing the cos
t of batteries over the long term and also the target costs for the Generati
on III vehicle. However, they say these positives are counterbalanced by rem
aining uncertainty in sales volumes. The analysts said before they take 揳 m
ore constructive viewon Tesla Motors Inc (NASDAQ:TSLA), they want to have
more confidence in the rate of the company抯 market penetration behind early
adopters.
by Michelle JonesSeptember 25, 2013
Wedbush analysts hosted an investor tour of Tesla Motors Inc (TSLA)抯 manufa
cturing facility and were pleased with what they found.
Debate continues on whether Tesla Motors Inc (NASDAQ:TSLA) will be able to l
ive up to the high expectations investors now have for it. But the company i
s starting to convince some analysts, like those at Wedbush, who hosted an i
nvestor tour of the automaker抯 manufacturing facility this week. However, t
hey still want to see more before they become comfortable enough to rate the
stock as a Buy or better.
Tesla Motors
Wedbush still Neutral on Tesla
Analysts Craig Irwin and Min Xu issued a report with their findings from the
tour of the facility in Fremont, Calif. They remain Neutral on the company
but have increased their price target from $150 a share to $180 per share. T
hey said they are 搃ncreasingly convincedthat Tesla Motors Inc (NASDAQ:TSL
A) will meet or exceed investor expectations 搃n both the near and intermedi
ate future.br />
Tesla抯 production line could be improved even further
They said currently the automaker抯 manufacturing line is producing vehicles
揳t an impressive rate,and they believe that the company could even flex
up production further over the 500 vehicles per week rate which the company
is seeing as it exits the third quarter of the year. They believe that the p
art of the line where the trim and final assembly of the vehicle is done is
搕he limiting factorfor the company抯 production capacity. The analysts su
ggest that Tesla Motors Inc (NASDAQ:TSLA) might be able to streamline that p
rocess to improve its production capacity even further.
The analysts also said every part of production for the Model S is 搈eticulo
usly planned,including the roadmap for 25 percent gross margins, which the
company is aiming for by the end of this year. They say one example is how
the company increased its gross margins from 5 percent in the first quarter
to 13 percent in the second quarter. They note that the sequential jump in g
ross margins was brought about by the release of about 500 temporary workers
who had been budged for under the ramp of the Model S.
Tesla抯 suppliers appear to be playing a key role
The analysts also believe that Tesla Motors Inc (NASDAQ:TSLA)抯 suppliers ar
e providing it with price concessions which will contribute about 200 to 300
basis points to gross margins by the end of this year. They said that these
concessions are likely due not only to the suppliersown cost-out executio
n but also their increasing expectations for Tesla抯 future.
They also said Tesla management didn抰 refute their checks which suggest tha
t they had qualified Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) t
o supply battery sells. They believe improving battery costs due to better c
ell pricing plus tailwinds from currency could support upside for Tesla Moto
rs Inc (NASDAQ:TSLA).
Tesla抯 valuation based on 2017
The Wedbush analysts said their target is based on 30 times Tesla抯 estimate
d 2017 earnings per share of $7.55, compared to their multiple of 25 previou
sly. They discounted back four years using a 6 percent discount rate. They b
elieve valuing Tesla on its 2017 estimates is the right thing to do because
that is the first year its Generation III mass market vehicle is expected to
scale. They also said a multiple of 30 seems fair because the company is st
ill in 揼rowth mode,which leaves room for the company to keep penetrating
markets and diversifying its vehicle line to push earnings higher and higher
.
They see a number of big positives in the company抯 path to reducing the cos
t of batteries over the long term and also the target costs for the Generati
on III vehicle. However, they say these positives are counterbalanced by rem
aining uncertainty in sales volumes. The analysts said before they take 揳 m
ore constructive viewon Tesla Motors Inc (NASDAQ:TSLA), they want to have
more confidence in the rate of the company抯 market penetration behind early
adopters.
