Low Expectations Could Set Tesla Q3 Deliveries Up For A Surprise

Previewing Tesla Motors Inc (NASDAQ: TSLA)'s third-quarter results to be released early next week, Baird said the stock has upside potential, as the bar is set low for deliveries. The firm believes several catalysts could drive the stock higher, going into the year end.

Analyst Ben Kallo noted that the company had issued delivery guidance of 50,000 for the second half. Although a specific quarterly number was not given, the analyst checks reveal that anything above 20,000 could be considered positive. Specifically, the firm targets deliveries of 12,000 for Tesla's Model S and 9,000 for Model X.

Baird referenced to the two energy storage deals Tesla struck recently to support its argument that the company is expanding its presence in the growing battery and energy storage industries.

Related Link: Analysts Wonder If Tesla Can Maintain Model X Demand Without Aggressive Discounting

Although Baird expects short sellers to return to Tesla as the SolarCity Corp (NASDAQ: SCTY) deal progresses, it is of the view that investors will be keyed into the ramp up of Model 3 in the intermediate term.

Baird, however, views SolarCity as a short-term trade, as the shares currently trade at 13 percent discount to the deal price. The firm believes the spread will narrow as the shareholder vote nears.

According to Baird, upcoming catalysts for Tesla include the ramp of the Gigafactory, additional news about the Model 3 and potentially the Paris Auto Show.

As such, Baird reiterated its Outperform on the shares of Tesla and kept its price target at $338.

At time of writing, Tesla shares were up 0.68 percent at $208.21.

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