Electric car maker, Tesla Inc. is due to report its second quarter earnings on August 5 after the market closes.
Tesla (TSLA, -0.24%) shares have added 20% to their value so far this year, although 18% of that increase has come in the past three months on the back of analyst upgrades for the stock. During the same period, the S&P 500 index (SPX, - 0.23%) has gained 2.5% and 1.2% respectively.
Dan Galves, Credit Suisse analyst, rated Tesla as outperform with a $325 price target last week maintaining a bullish view on the electric car maker. Much of his analysis is based on the new referral program introduced by the company. Galves said the program does not indicate a weak demand for Tesla vehicles, referring to the solid 2015 second quarter deliveries report.
Conversely, UBS analyst Colin Lagan last week found reason to downgrade the rating from buy to neutral and he cut the price objective by $10 to $210. This view is based on doubts about Tesla’s ability to deliver 1.5 million vehicles in the next ten years as well as the length of time needed to fully develop the battery storage market. Lagan also believes that the company will not achieve its 2015 full year deliveries target.
Wall Street analysts have an average price target of $279.78 on Tesla shares which is around 5% up on prices at the end of last week.
Investors need to pay particular attention to any announcement regarding the launch date of the long awaited Tesla SUV, the Model X which is currently due for its debut in September.
Dan Dolev, an analyst with Jefferies, says, “All eyes will be on the Model X”, although he also believes that the company is placing its reliance on a higher demand for the car than is warranted.
Tesla is expected to report an adjusted loss of 60 cents per share for Q2 according to analysts polled by FactSet. This would result in its third consecutive quarter without an adjusted profit. During the second quarter of 2014, the company reported earnings of 11 cents.
Business Finance News reports that there are expectations that Tesla will once again eclipse analyst projections for both earnings and revenue as it has done in seven of the last eight quarters.
The same analysts polled by FactSet are expecting revenue to climb to $1.18 billion from the $858 million reported for Q2 last year. The automotive division is expected to report sales of $1.1 billion as against the $768 million reported a year ago.
Looking to the future, Tesla has said that its mass-market offering, the Model 3, should be on the showroom floor within 2 to 3 years. Any changes to this timeline will be watched with great interest with regard to share values going forward.
All eyes and ears will be on Tesla as well as its founder and CEO, Elon Musk, after the bell on Tuesday and while a Q2 loss is forecast, analysts’ expectations are for the company to break even in the third quarter and return to profitability for the full year. To achieve this, Tesla needs to report strong second quarter results.
MT4 Chart: Tesla