Updated from 8:51 a.m. to include additional comments from 3rd quarter earnings call in the fifth paragraph.
NEW YORK (TheStreet) –– Tesla Motors (TSLA) shares were falling in early Wednesday trading after Morgan Stanley cut 2015 earnings estimates on back of the delayed Model X launch, citing "execution hurdles."
Analyst Adam Jonas and his team cut estimates for 2015, as Jonas said he now expects Tesla to earn $2.45 a share, down 44% from prior estimates, and well below the consensus estimate of $2.99 a share. He also expects the company to generate $5.6 billion in revenue vs. the consensus estimate of $6.2 billion, largely because of delays with the Model X, which is now expected to begin deliveries in the third quarter of 2015.
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"Following 3Q results, updated outlook and Model X launch delay, we are making significant adjustments to our 2014 and 2015 earnings forecasts, leaving our target unchanged at $320," Jonas wrote in the note. "Tesla has some execution hurdles to surmount, but we'd still be buyers."
Jonas, who rates Tesla "overweight" with a $320 price target, now expects 5,000 Model X deliveries for the year vs. a prior outlook of 15,000. Jonas cited "reasonable execution risk on this important model to ensure uncompromising quality of initial units." Jonas also noted that the Falcon Wing doors on the Model X may be a technical challenge for the Palo Alto, Calif.-based Tesla, but Tesla has been adamant that it's not an issue, saying the concerns are "misplaced," according to Jonas. Not only are there customers who want Falcon Wing doors, but the design was "relatively easy to execute compared to other technical accomplishments at the company."