Barclays’ Brian Johnson and team hosted Jeff Evanson, Tesla Motors’ (TSLA) vice president of investor relations, for a series of investor meetings last week and came away with a better sense of what’s going on at the company.
Getty Images In a report released Friday, Johnson wrote:
The meetings provided us with better appreciation of the ongoing momentum at Tesla – revenue growth will be driven by the international rollout, and battery costs are coming down, which at some point may make the Gen III vehicle a viable option for consumers. However, we reiterate our EW rating as the path to margin expansion will be gradual – although Tesla believes it can ultimately generate mid-teen op. margins, investors should expect closer to low-mid single digit margins as Tesla invests in its growth. Moreover, we already give Tesla the benefit of the doubt in valuation on many fronts, and we see the grid storage opportunity as only a 20-25% boost to valuation, not the doubling that some expect.
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Shares of Tesla have dropped 3% to $238.93 at 3:04 p.m. today.
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