Baird Adjusts Estimates For Tesla Motors Inc (NASDAQ:TSLA)

Tesla Motors Inc (NASDAQ:TSLA)’s estimates have been revised at Baird, partly to reflect vehicle deliveries. Baird has a NEUTRAL rating and price target of $282 on Tesla. The mass-market Model 3, Gigafactory and Tesla Energy are some of the issues that Baird expects to dominate Tesla discourse in 2016.

Financial flexibility

Baird counters the notion that Tesla Motors Inc (NASDAQ:TSLA) might need to raise capital through equity or debt this year. According to the firm, as much as cash burn rate at Tesla is a matter of concern for many investors, the company has ample cash and revenue to fund its operations throughout 2016.

Tesla has about $1.4 billion of cash balance and the company also continues to grow its revenue faster. As such, Baird believes that Tesla can bankroll its various projects in 2016 without raising additional capital. However, even if Tesla were to raise capital this year, it would be more about taking opportunity of a favorable environment than not plugging a financial hole.

New estimates

Baird expects Tesla Motors Inc (NASDAQ:TSLA) to report non-GAAP revenue of $1.81 billion in 4Q2015. The consensus calls for revenue of $1.849 billion. The firm is further looking for gross margin of 22.7%, against the consensus estimate of 22.1%. Additionally, Baird is expecting Tesla to report non-GAAP EPS of $0.14 compared with the Street average of $0.17.

Model X margins trimmed

As for Model X, Baird is choosing to be more conservative, thus vacating its earlier gross margin estimate of 15% for the product. Instead, the firm now models gross margin of 10% for Model X in 1Q2016.

Overall, Baird is predicting that Tesla will report EPS of $1.60 in 2016, down from $1.93 that it previously estimated for the year. The consensus estimate calls for EPS of $1.70 in 2016.


Presently, Tesla Motors Inc (NASDAQ:TSLA) is producing about 238 Model X vehicles per week. Baird says that the company needs to manufacturer 450 Model Xs per week to meet its target of 23,400 Model X deliveries.

Among other things, Baird considers Gigafactory, the mass-market focused Model 3 and Tesla Energy as key tailwinds for Tesla in 2016 and beyond.

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