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Tesla Earnings Preview: What Wall Street's Thinking

Litchfield Hills Research analyst Theodore O'Neill (Buy, $222 PT)

Feb. 18 note

"As long as there is a large group of investors, who compare TSLA to a traditional automaker the stock will remain undervalued in our opinion. We feel that investors underestimate the appeal of the Model S and the sales and service experience."

Morgan Stanley analyst Adam Jonas (Overweight, $153 PT)

Jan. 22 note

"The company disclosed it has surpassed its own revenue expectations for 4Q by 20% on 6,900 units delivered of Model S. All eyes will be on the gross margin (25% target) and the order book into 2014.

Investors should pay close attention to any commentary on initial deliveries to Europe and the startup of Asian deliveries. Given the 4Q run-rate, it appears as if our 2014 full year Model S volume estimate of 33k units is looking conservative."

Bank of America Merrill Lynch analyst John Lovallo (Underperform, $65 PT)

"We recently estimated that Tesla would need to sell approximately 330K vehicles per year by 2020, or 15X expected 2013 volume, to begin to justify a $161/share price (see Giving credit where credit is due, but remaining realistic). We note that Tesla's current market price is now 10% higher, which we believe translates into the need for even greater volume to reasonably support the stock valuation. Furthermore, our forecasts incorporate luxury vehicle EBIT margins of about 11.5% by 2020, which appears a stretch given that the majority of the company's sales will likely be attributable to the more mass market oriented Gen 3 model by that time. Furthermore, today's announced China pricing strategy could add further pressure to margins and returns, versus the market's optimistic assumptions. In short, we believe significant fundamental headwinds confront Tesla's current stock price and that another sharp correction could be forthcoming. As a result, we reiterate our Underperform rating and $65 price objective."

Jefferies analyst Elaine Kwei (Buy, $190 PT)

Jan. 15 note

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"Yesterday's 4Q delivery announcement was unexpected and surprised to the upside. For the last several quarters, TSLA has beaten their delivery guidance by a few hundred units, and based on VIN checks at stores in California last month, we were modeled at 6,000 Model S deliveries in 4Q. The 6,900 result reflects strong demand in the US and Europe. Total shipments for 2013 were roughly 22,450 compared to prior guidance of 21,500. Although the company declined to break out international sales, we estimate roughly 2,000-2,500 were delivered outside of the US. No information was provided with regard to margins or other 4Q operating results."


--Written by Chris Ciaccia in New York

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