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Merrill Lynch Analyst Very Bearish Tesla Motors (NASDAQ:TSLA)

Posted by: : Paul EbelingPosted on: May 7, 2015 Merrill Lynch Analyst Very Bearish Tesla Motors (NASDAQ:TSLA)

Merrill Lynch Analyst Very Bearish Tesla Motors (NASDAQ:TSLA)


Tesla Motors Inc. (NASDAQ: TSLA) has survived yet another weak financial report. Other than our negative call on the EV maker, the most negative analyst call on Wall Street is with that low price objective of 65/share.

The EV (electric car) maker posted an adjusted diluted EPS loss of 0.36 on adjusted revenues of $1.1-B. In the same year ago frame, the company reported adjusted EPS of 0.02 on revenues of $761.34-M. Q-1 results also compare to the consensus estimates for EPS of 0.31 and $1.23-B in revenues.

After the Q-1 report, Bank of America Merrill Lynch (NYSE:BAC) lowered its Y 2015 EPS estimate to 0.40 from 0.95, the Y 2016 estimate to 1.45 from 1.50, and Y 2017 estimate to 2.35 from 2.40, as the firm is maintaining its 65/share price objective.

The takeaways that Merrill Lynch saw in the earnings are, as follows;

  • Pre-announced deliveries were ahead of forecast.
  • Q-1 adjusted EPS loss was not quite as bad as expected.
  • Tesla burned $558-M of free cash flow in Q-1(-$624-M excluding regulatory credits), which was worse than the $339-M estimate.
  • Operating expenses, Capex and cash burn all still elevated, little relief is in sight. And that the market continues to underestimate the significant challenges ahead for Tesla.

In the Merrill Lynch report, analysts John Lovallo and John Murphy, detailed: Tesla pre-announced Q-1 of Y 2015 deliveries of 10,030 units on 4/3 (actual units 10,045), which was slightly above our 9,900 unit estimate and the company’s conservative 9,500 unit forecast. Revenue, excluding lease accounting, of $1.1-B was roughly inline with our forecast, but adjusted EPS loss of (0.36) was just ahead of our (0.40) expectation and consensus of (0.49). Excluding +$66-M of regulatory credits and a $22-M FX revaluation hit, not explicitly incorporated into our model, adjusted EPS would have been a loss of about (0.71) for the core business.

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The stock has a consensus analyst price target of 263.59 and a 52-wk trading range of 177.22 to 291.42.

Symbol Last Trade Date Change Open High Low Volume
NASDAQ: TSLA 236.8 May-07-2015 6.37 221 237.48 220.25 9,438,400
HeffX-LTN Analysis for TSLA: Overall Short Intermediate Long
Bullish (0.43) Very Bullish (0.54) Bullish (0.27) Bullish (0.47)

Stay tuned…


Paul Ebeling


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Paul Ebeling

Pattern Recognition Analyst, equities, commodities, forex
Paul Ebeling is best known for his work as writer and publisher of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly-regarded, weekly financial market letter, where he enjoys an international audience among opinion makers, business leaders, and respected organizations. Something of a pioneer in online stock market and commodities discussion and analysis, Ebeling has been online since 1994. He has studied and worked in the global financial and stock markets since 1984.

Trade FX, Equities and Options with the World's Leading Platform , call our trade desk 631 482 0376, or contact us to get started.

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