Time To Buy Tesla: Beats Model S Deliveries, Production On Track

Tesla Motors, the manufacturer of one of the most successful electric cars launched in the US, reported its third quarter earnings. The company topped revenue estimates but failed to meet EPS estimates. More importantly, the company managed to top market estimates for delivery of its flagship product, Model S, which is supposed to yield 90% of the revenue for the company in 2012.

The company maintained its revenue guidance of $400-440 million for 2012. Current gross margin of 17% was in line with expectations. However, the company expects margins to improve significantly in the next quarter due to the improvement in volumes and planned cost reductions. R&D is expected to remain flat for Q4. CAPEX will be around $240 million for the year.
A Morgan Stanley analyst believes that the company's revenues will multiply 14 times in the next four years, 40 times by 2020, and 70 times by 2026. Given the huge upside and ramp-up in production facilities, the stock is recommended as a buy. Read more