Baird analysts have labeled Tesla Inc (NASDAQ:TSLA) a “Fresh Pick” as they believe strong fundamentals would “drive shares higher,” despite negative headlines revolving around management turnover and executive leadership at the electric-vehicle maker.
Analysts Ben Kallo and David Katter recently toured Tesla’s Fremont factory and came away satisfied.
“Elon Musk’s email to employees indicated Q3 would be 'the most amazing quarter in our history,' VIN registrations and the Bloomberg Model 3 tracker seem to imply production is on track, and insideEVs reported the company sold approximately 23k vehicles in August. We recently toured the Model 3 production lines in Fremont, and came away incrementally positive,” wrote Kallo and Katter in a note to clients.
Tesla stock was up nearly 2.5% to US$269.76 in premarket trade.
READ: Tesla loses its chief accounting officer and head of human resources; shares sink
The analysts felt that in the second half of the year results could exceed estimates.
“We believe the continued focus on domestic deliveries is a positive read-through for demand; if Tesla were to shift focus to international deliveries instead of maximizing the federal tax credit in 2H:18 we think it could imply demand is soft. As a result, we view the company's focus on domestic deliveries positively,” they wrote.
Musk security review is inaccurate, says USAF
Separately, Air Force spokesperson Captain Hope Cronin said media reports suggesting the US Air Force is reviewing Tesla CEO Elon Musk’s security clearance are inaccurate, reported Reuters.
Musk has security clearance because another of his companies, SpaceX, provides satellite launch services to the US government.
Musk has taken shareholders on a wild ride lately, engaging in Twitter fights and recently appearing to smoke marijuana, drink whiskey and wield a sword on a live-streamed podcast with comedian Joe Rogan.
The fanfare surrounding the electric automaker appears to have also taken its toll on high-level executives. Chief Accounting Officer Dave Morton announced Friday that he would be leaving the company after just one month on the job, citing “the level of public attention placed on the company.”
READ: Elon Musk crows about EV sales, Twitter shares sink anew and Uber coming out with scooters
“Negative media coverage of the Rogan interview could be an overhang on shares, but we think investors will primarily focus on the executive turnover,” wrote the Baird analysts.
Shares of the electric carmaker closed trading at down 6.3% Friday, with investors on edge after a tumultuous August during which Musk proposed and then abruptly pulled the plug on a go-private deal.
“We believe Mr Morton’s departure reflects the intensity of Tesla’s work culture, and is not indicative of problems with fundamentals or financial reporting,” wrote the analysts.
“While we expect investors will continue to question management turnover, particularly given intense scrutiny on the company, we do not think the turnover is indicative of problems with financial reporting at the company,” they added.
Contact Uttara Choudhury at [email protected]
Follow her on Twitter: @UttaraProactive
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