Tesla's Earnings Show Solid Start To 2017, Say Mostly Bullish Analysts

By Ciara LinnaneMarketsMarketWatch Pulse

Tesla Inc.'s First-quarter earnings showed a solid start to 2017 and the stock is expected to chalk up further gains, analysts wrote on Thursday. "TSLA beat our estimates, displayed strong automotive and Tesla Energy gross margin, and reiterated first-half delivery guidance," wrote Ben Kallo, analyst at Baird. "Importantly, the Model 3 remains on track for July production and should ramp to ~5k Model 3 vehicles per week by year-end." Kallo reiterated his outperform rating on the stock and $368 price target. At RBC Capital Markets, analyst Joseph Spak noted lower free cash flow burn, driven by lower-than-expected capital spending. Spak rates Tesla sector perform with a $314 price target. J.P. Morgan analyst Ryan Brinkman welcomed margin improvements and the reiteration of Model 3 timing, but said execution risks remain. "we continue to be cautious relative to the potential for a slower than guided start to Model 3 assembly, and newly believe that the potential for Model 3 pre-orders cancellations may increasingly become a point of investor concern," he wrote. Brinkman rates the stock underweight with a $190 price target, up from a previous $185. Tesla shares dipped 1.8% in premarket trade, but are up 46% in 2017 so far, while the S&P 500 has gained 6.7%.

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