Tesla may issue strong guidance for fourth quarter vehicle deliveries, says Morgan Stanley

Tesla Inc (NASDAQ:TSLA) has the potential to issue an “extremely strong” guidance for vehicle deliveries in the fourth quarter of the year, a report by investment bank Morgan Stanley (NYSE:MS) said.

Morgan Stanley analyst Adam Jonas forecast in a research note to clients a 20% sequential improvement in Model 3 deliveries and sees them being heavily weighted to top-of-the-line mix.

Given his understanding that the vast majority of Model 3 production is dual-motor, Jonas added that he would not be surprised to see average transaction prices for the Model 3 to approach $60,000 per unit or more.

READ: Tesla starts off 4Q with strong production numbers; Musk tweets about climate change

Given his thinking that the company’s working capital terms could drive a cash flow surprise, Jonas said he sees conditions supporting Tesla offering “extremely strong” guidance for 4Q profit and cash flow. 

He also believes Tesla will use the momentum to potentially tap the equity market and continues to forecast a $2.5 billion equity capital raise in 4Q. Jonas kept an Equal Weight rating on Tesla shares with a $291 price target.

Tesla shares rose 1.17% in Friday’s premarket to $267, having closed on Thursday 2.9% lower at $263.91.

Reporting by Rene Pastor, contactable on [email protected] 

Story by ProactiveInvestors