Tesla (TSLA): Waiting On Model 3 Ramp - Deutsche Bank

Deutsche Bank analyst, Rod Lache, reiterated his Hold rating on shares of Tesla Motors (NASDAQ: TSLA) after Q1 was a bit better than we expected w/r/t gross profit, improving 500 bps sequentially to 18.8%. The profitability of Model S/X improved to >25% vs.~20% in 4Q17 but, as expected, Model 3 experienced a significant negative gross margin.

The analyst stated "We have fine-tuned our estimates following 1Q results and updated guidance. Overall, we expect Auto gross margins of 21% in 2018 (25% for Model S & X, with M3 getting to 20% by 4Q18). We estimated cash burn of $500 MM in 2Q18 (total cash position of $2.2 bn, the lowest point in the yr but still well above TSLA’s $1.0-$1.5 bn minimum cash level), with positive free cash flow by 4Q18". The net reaction is no change to the price target of $365 or rating as investors wait and see if the company can lock in on its rapidly changing targets.

For an analyst ratings summary and ratings history on Tesla Motors click here. For more ratings news on Tesla Motors click here.

Shares of Tesla Motors closed at $301.15 yesterday.

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