The acquisition of SolarCity is expected to add $500 million of cash to Tesla's balance sheet over the next three years, but the analyst pointed out this refers to total cash flow, not the standard free cash flow.
Tamberrino's own estimates peg SolarCity to break even on a total cash flow over the next three years.
Tamberrino noted that SolarCity is aggressively transitioning its product mix, as 30 percent of September's bookings were represented by cash/loan sales versus less than 10 percent in the first quarter.
Given this shift, management believes SolarCity could reach $1 billion of revenue in 2017 (versus the analyst's current estimate of $840 million), which is "achievable" but only if a 30 percent mix holds.
Tamberrino believes new commentary on cost synergies was "lacking" and a prior goal of achieving $150 million of cost synergies in year one was reiterated.
Moreover, the analyst remains "more guarded than management" on revenue synergies as not all customers will be interested in buying all three products (car, solar, battery) that a joint Tesla–SolarCity entity will sale.
Tesla reiterated its position that it does not need to raise capital in the near term but will keep an eye on the market.
Tamberrino pointed out commentary from the conference call suggested technology from Panasonic and Silevo, a solar panel manufacturer SolarCity acquired in 2014, would be employed at the company's factory in Buffalo, New York.
In addition, management expects to meet the $5 billion spending and 1,500 job requirement
At last check, SolarCity was down 0.84 percent at $18.91, while Tesla was down 0.55 percent, trading at $189.75.
|Oct 2016||Axiom Capital||Upgrades||Sell||Hold|
|Aug 2016||Raymond James||Downgrades||Strong Buy||Market Perform|
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