Analysts at Baird said they expected Tesla Inc. (NASDAQ:TSLA) to release second quarter delivery numbers by July 3 and were buyers into the release.
Baird reiterated its Outperform rating and Fresh Pick designation ahead of the announcement. The firm has a US$411 price target on the electric-car maker.
“The primary focus will likely be on exit rate Model 3 production, and we believe shares could trade higher if the company approaches its targets,” Baird analysts Ben Kallo and David Katter wrote in a note to clients.
“Additionally, we believe investors will look for total Model 3s produced in June (if the company releases June data) in an effort to gauge steady-state production rates,” they added.
The analysts forecast that Tesla would most likely deliver 25,000 Model 3 vehicles, with more vehicles in the channel, though “the focus will be on production” as opposed to “total deliveries.”
READ: Goldman Sachs: Tesla's delivery numbers for Models S and X to miss estimates
“Consensus estimates for Q2 Model 3 deliveries may be too high, particularly given our belief there could be a larger-than-normal delta between production and deliveries due to the ramp during the quarter. That said, Elon Musk’s recent email could indicate the company is tracking ahead of consensus expectations,” wrote the analysts.
The analysts said that an update on the Model 3 production timeline could be a positive catalyst.
“We think there is a chance TSLA announces a pathway to continue to expand production, which would likely be a positive catalyst. We think there is an off chance TSLA could provide additional information on a potential path to further increasing production (beyond 5k/week) ahead of expectations,” wrote the analysts.
Meanwhile, Reuters reported Thursday that the Tesla is not producing enough Model 3s per shift to reach the 5,000 per week target that CEO Elon Musk said it would reach by Saturday.
According to media reports, missed production targets for the Model 3 contributed heavily to Tesla burning through more than US$1bn in three of the last four quarters. Investors have been worrying Tesla will have to sell more stock or add to its already hefty debt load to raise enough money to survive.
Musk, however, told shareholders that Tesla will be "cash flow positive" during the second half of this year by delivering 5,000 Model 3s with a starting price tag of $35,000 per week.
Shares in Tesla closed 1.6% higher to US$349.93.
Contact Uttara Choudhury at uttara@proactiveinvestors.com
Follow her on Twitter: @UttaraProactive