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In its "Americas: Automobiles" report published Thursday, Goldman also lowered its 6-month price target for Tesla to $185 from $240.
The report noted that it now sees "incremental risk to the business related to management's deployment of capital for mergers and acquisitions (M&A), and further believe that any delay in the company's timeline to launch its new Model 3 will be detrimental to shares," the bank said.
"With solid third-quarter 2016 deliveries and the potential downward catalyst of a missed Model 3 launch timeline out in the second half of 2017, we prefer to be neutral on shares," the report noted.
Earlier this year, Tesla Chief Executive Elon Musk warned of a "small equity capital raise," to fund the development of Tesla's Model 3 car and to build out its massive battery-making "gigafactory." The company has come under fire for being a "cash-burning machine" but is also plowing ahead with a $2.6 billion purchase of solar panel manufacturer SolarCity, which Musk also chairs.
The bank said that the proposed combination of Tesla and SolarCity, which it said were "two high growth, high cash burn businesses" created, it said, "a higher risk entity given the combined ongoing capital needs and higher net leverage that would potentially result."
Explaining why it was not more negative on Tesla, the bank said that in the near-term it saw Tesla achieving a positive earnings-per-share (EPS) result in the third quarter of 2016, "mainly on strength of vehicle deliveries achieving half of the company's second half of 2016 guidance." Earnings-per-share is an important metric used by investors to gauge the value of a stock.
"This puts our updated (third quarter of 2016) EPS estimate of $0.28 above consensus of $0.07. Additionally, we raise our estimates to fully incorporate the Tesla Energy business – driving a net positive increase to our 2016 through 2019 EPS estimates."