With the end of the quarter coming, analysts covering Tesla are coming out with notes about their expectations and some of them got to meet with Tesla’s Vice-President of Investor Relations, Jeff Evanson, to help them better understand the company’s performance in the fourth quarter.

Pacific Crest’s Brad Erickson and Elliot Arnson came out of the meeting with the impression that the Tesla Model 3 is “on track” to launch in the second half of 2017, but they are more cautious about Tesla’s short-term performance.

The analysts are giving an ‘equal weight’ rating to Tesla’s stock and highlight that it is difficult to attach value to the long-term bull case.

“Longer-term bulls still believe that electrification of the world’s cars will benefit Tesla’s vertical approach to delivering energy and mobility, which is certainly plausible, in our view, but it is very difficult to ascribe value to such a nascent market at this point.”

They list upcoming potentially positive catalysts, like the Tesla Gigafactory event on January 4 and the potential launch of the Model 3 next summer.

But they also warn of what they see as upcoming difficulties in the short-term:

“Tesla still faces two likely upcoming quarters of sequential declines in Model S deliveries, which bears will likely latch onto, and we think Model X demand is still lagging expectations. As a result, we need more confidence that these two factors are not indicating weaker underlying demand before getting more constructive with our rating.”

Over the last 3 years, Tesla’s deliveries have declined on a quarter-to-quarter basis from Q4 to Q1, but that was when Tesla was only selling the Model S.

Erickson noted that Model X production is still “somewhat inconsistent.” Tesla was in what CEO Elon Musk described as “production hell” with the Model X during the first half of the year, but it seems to have been fixed during the last quarter.

Tesla went from producing 2,400 Model X units in Q1 to 4,465 in Q2 to 8,821 in Q3.

After the meeting, the analyst noted that while Tesla introduced less expensive versions of the Model S during the year, the software-limited Model S 60, “low-end Model S buyers keep springing for high-margin options.”

Tesla aims to deliver about 25,000 vehicles during the fourth quarter in order to achieve its goal of 80,000 deliveries in 2016. Earlier this month, we reported that the company is on a full end-of-the-year delivery push to meet the goal. Inventory cars started showing up in volume at Tesla’s stores.

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