Recent Goldman Sachs assigns Tesla neutral rating, target price $ 61, the main contents are as follows:
Goldman put Tesla’s stock rating cut to neutral, removed from the Americas Buy list, the risk/reward more balanced.
Tesla company reported first-quarter earnings report, Goldman Sachs downgraded the stock to the company to neutral. Goldman Sachs believes that Tesla’s fundamentals have not changed, the company has the right products, the ideal business model and expected success of the team, its growth prospects have real scarcity value. However, Tesla stock price rose from 319-day low of 59% (S & P 500 Index over the same period rose 5.4 percent), according to Wednesday’s closing price, from Goldman future six new target price of $ 61 only 9% upside , so that the risk/reward more balanced. 2012117 Date listed as Goldman Sachs Tesla Buy list, the company’s share price rose 110% over the same period the S & P 500 index rose 25%. Over the past 12, the Tesla shares rose 85 percent, the S & P index rose 15 percent over the same period.
Goldman Sachs believes that Tesla 2013 overall positive first-quarter earnings this quarter’s liquidity situation has improved, in accordance with the terms of production volume 20,000 increase in sales, which means production reached 55, far much higher than the 2 parts of 35 or so per day. But there are also weaknesses Tesla, excluding carbon credit revenues for the first quarter gross margin is very low, only 5%, and the emergence booking/order revoked update. Goldman Sachs is expected to revise 2013-2015 adjusted EBITDA, respectively, from $ 84 million/$ 344 million/$ 504 million down to $ 69 million/$ 267 million/$ 401 million, mainly because of the use of lease accounting standards, delayed revenue recognition. In fact, Goldman Sachs is expected for the entire Tesla little change. Goldman Sachs believes that Tesla will be achieved in the bottom 25% of the gross margin, because a lot of the cost of leverage still exists (even if the output close sales pace), such as to reduce logistics costs, component costs and manufacturing process improvements. While this Tesla to build its track record has a positive impact, Goldman Sachs continues to believe that the company’s adjusted profit potential risks began to be fully reflected, the current stock price increase is too large, Goldman Sachs this on the sidelines. Goldman’s valuation based on EV/sales, EV/EBITDA, earnings and cash flows discounted to 2018, was discounted present value. Since Tesla first quarter operating well, better than expected sales, quarter-end liquidity has improved, so Goldman’s conversion rate from the previous 20% to 15%. Goldman also raised its scarcity premium from the previous 15% to 20%. Key upside risks/downside risk: long-term demand and operating stability.
Goldman Sachs lowered due to the recent lease affect earnings per share
Goldman Sachs lowered 2013/2014/2015 EPS estimates, mainly on account of Tesla recently announced financing plan impact. According to Tesla’s expected that this program is now trading revenues accounted for about 25 percent of U.S. sales, the company is expected to grow to 50 percent over the next few. Although the scope of the project itself does not belong to lease (reference 201342 Japanese Goldman analysis: Model S cars to attract customers to choose, not without loss risk), but Tesla lease accounting standards are required to adopt. Therefore, Goldman Sachs expects this to Tesla’s revenue in 2014 and 2015 to generate more than $ 500 million negative impact, mainly because this program led to early revenue recognition decreases. However, in the next few less impact in this regard, because the carrying cumulative lease payments upfront largely offset by lower revenue recognition. Goldman Sachs still expects to achieve output of the Tesla will normalize in 2017, reaching 90,000 on revenue of $ 6.4 billion, profit of about $ 5.33 per share, which supports Goldman future six new target price of $ 61.
Minor adjustments to the recent Goldman Sachs sales forecast
Goldman importance of identifying key assumptions Tesla expected. Compared to the previous forecast, Goldman minor adjustments to the 2013 and 2014 production is expected. Although the Goldman Sachs 2013 Model S car shipments expected upwards 21,000, in line with Tesla recently announced financial guidance, but also lowered the company’s 2014 sales forecast, reflecting the slow development of ModelX vehicle platforms. As shown, Goldman Sachs expects the company has ModelS/X models, the next generation of automotive projects will be fully operational in 2017, this initial interval based on valuations.
Sustainable demand is still a significant problem
Production targets despite the implementation of compliance programs, but the long-term demand is still the key factor. Therefore, Goldman Tesla booking/order cancellation update disappointed, this factor adds more transparency. As mentioned above, according to the degree of run rate, Tesla received orders faster than every 20 000, indicating that 1/2 the time frame has increased dramatically.
Long term, Goldman Sachs demand through product price and yield broad relationship, Tesla ModelS models and third-generation models of production is foreseen. Goldman Sachs raised its global sales of luxury cars price positioning a simple regression model, through this model to assess the needs of Tesla Motors. Goldman Sachs believes that car is not a mere commodity, for the same price positioning, the production has a significant difference, due to the role of subjective factors, such as brand awareness and perceived quality, Goldman Sachs believes that Tesla has a good starting point.
ModelS models price is expected to be $ 75,000 (median price of $ 83,000, a $ 7,500 tax deductible), the third-generation model is expected to be $ 41,000 price, indicating that demand for cars are expected to be 51,000 and 87000. However, given the current rate of acceptance of electric vehicles will be low, the results are equivalent to Goldman Sachs, according to the current model estimates, to 2018, ModelS/X models sold 37,000, the third-generation models sold 67000 .
Goldman Sachs believes that if significant penetration of electric vehicles increase, these data have significant upside potential.
Goldman using enterprise value/Sales, EV/EBITDA, earnings and discounted cash flow valuation of the company, then the results of four methods of averaging. Finally, Goldman Sachs raised its scarcity premium (from 15% upwards to 20%), reflecting the growth characteristics of Tesla, which Goldman Sachs assigns rating is quite unusual approach.
Goldman objective valuation using multiples of companies from a wide range of groups, including luxury car manufacturers, automotive technology companies and high-growth companies, their growth characteristics and Goldman Sachs expects growth in the next few tesla similar characteristics. Since only a small number of indicators is expected to occur later in 2014, Goldman Sachs used 2014 valuation multiples for forecast for the next few, but the results were equivalent, was present value. Since Tesla first quarter operating well, better than expected sales, improved liquidity quarter, Goldman Sachs put the conversion rate from the previous 20% down to 15%.