One Wall Street firm reports Tesla (NASDAQ: TSLA) is making significant progress in ramping up production of its Model 3 electric car.
KeyBanc Capital Markets significantly raised its second-quarter Model 3 delivery estimate to 30,000 from 20,000, citing its conversations with Tesla dealers.
According to analyst Brad Erickson, "Our checks with sales centers indicate Model 3 deliveries are tracking ~50% higher than our prior estimates for the quarter, prompting us to raise our estimates.
"While the longer-term debate on TSLA remains more balanced … we maintain that evidence supporting the bear case is not likely to emerge in the near term, in our view."
Tesla's stock is up $8.00, or 2.4% at the start of trading Tuesday to $340.10. Its shares rose 6.7% this year through Monday versus the S&P 500's 4.1% gain.
Last week CEO Elon Musk said it is "quite likely" the company will hit a weekly Model 3 production rate of 5,000 cars by the end of the month. Tesla has struggled with production issues with the vehicle.
Erickson noted his conversations with sales representatives at 20 Tesla stores revealed Model 3 deliveries for the second quarter are pointing to higher than his previous expectations. As a result, he also increased is full year Model 3 delivery estimate to 118,182 from 98,182.
The analyst reiterated his sector weight rating and $300 "fair value" price target for Tesla shares, representing 10% downside to Monday's close.
