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Shares of Tesla Surge on Sales Record

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Shares of Tesla Surge on Sales Record

July 3 2015, 08.18am GMT


While the rest of the automotive manufacturers release their sales figures on a monthly basis, Tesla Motors (TSLA, +4.04%) release their sales figures on a quarterly basis. On Thursday, the company reported deliveries, its proxy for sales, of 11,507 Model S vehicles during Q2.

This is above the companies own forecast of between 10,000 and 11,000 for the quarter.

Tesla had earlier forecast that sales of the pricey sedan would increase by 50% over the 2014 figure which had grown by 41% over that of the previous year. The company is ahead of target with Q1 and Q2 sales for 2015 showing a healthy 54% increase of sales for the same period in 2014.

While the total sales are miniscule in comparison to the number of vehicles sold by the big manufacturers, it should be borne in mind that the Tesla S2, with a $75,000 price tag, competes only in the high end premium sedan segment. Competing with the likes of the highly rated Mercedes Benz S class, the Tesla Model S was the top seller in its class in the first quarter.

Tesla stock recovered to price levels last seen in mid-September to show gains of 24% for the year which is 30 times that of the S&P 500 Index (SPX, -0.03%) over the same period. The last three months have seen the stock surge by 44 percent compared to the 0.4% growth in the S&P 500.

Following the release of the figures on Thursday, Bank of America Merrill Lynch who have been consistently bearish about Tesla, almost tripled their price target on the share from $65 to $185.

The average price target on Tesla shares is $276.37, according to FactSet, a figure which is 3% higher than the Wednesday close.

Analysts at Bank of America Merrill Lynch maintained their cautious view however, keeping their rating unchanged at underperform, stating that the company’s shares are overvalued.

The analysts note also said that Tesla could be successful as a niche company, but that in the short term, the push for fuel cost efficiency in cars would be met with other options that are turbocharged, downsized with “internal combustion engines on lighter vehicles”.

MarketWatch reported that the analysts also said that among the questions hanging over Tesla is whether demand for the Model S would wane? Added to this, the other question centered around whether the launch of the new Model X SUV would be delayed or not?

Tesla CEO Elon Musk said the first Model X deliveries would begin late in the third quarter. Tesla announced that it already has deposit backed orders for 20,000 for the SUV.

Investors are of the belief that the Model X must be delivered as forecast in order for the company to meet its own sales projections for 2015 and to appear to be backing the company to meet expectations.

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