Tesla (TSLA) Optimism Expected to Grow into Model X Launch, Factory Gearing Up - Pacific Crest

Pacific Crest maintained an Overweight rating on Tesla Motors (NASDAQ: TSLA) with a price target of $293. Following a factory visit in Fremont, analyst Brad Erickson noted the company was "gearing up" for the Model X, and he expects investor optimism to grow into the launch.

"We were encouraged to see Tesla's new body line (called Body Line 2) beginning to pilot Model X shells, and we view this as a good sign toward the company being able to launch the vehicle "on time." Compared to Body Line 1, the sheer size and greater number of production robots (we'd estimate 3x to 4x) was evident, and we couldn't help but notice several buses worth of new employees receiving training for the new line. To say the mood in the factory is one of "gearing up" would be an understatement," said Erickson.

"We continue to expect the X launch sometime in September and would expect investor optimism to grow into this launch. Further, with strong initial reviews (which we think are likely), this could certainly prevent a "sell-the news" type of scenario," added the analyst.

Erickson went on to describe the short thesis as "increasingly fatiguing."

"Bears think that Tesla may not be able to sustain demand to support the Q4 ramp, and we think they are looking at an execution misstep to drive a shift in sentiment versus the persistent increase we've seen since the beginning of this year. Given the strength of orders for the Model X and our views of steadily rising demand for the Model S, we view this scenario as unlikely. While we're not ruling out the X possibly being delayed by a few weeks, any weakness this might drive would likely be temporary and incremental long-term believers would it see as a buying opportunity, in our view. As such, we remain buyers of TSLA and see upside to $293," said Erickson.

For an analyst ratings summary and ratings history on Tesla Motors click here. For more ratings news on Tesla Motors click here.

Shares of Tesla Motors closed at $268.79 yesterday.

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