'Tesla may have crossed the line to become self-funding': Here's what Wall Street is saying about Tesla's surprise profit

Price target: $325 (from $315)

"TSLA may have crossed the line to become self-funding," said RBC analyst Joseph Spak."But is it sustainable? Near-term probably yes. Longer-term more questions."

He added: "While Tesla is a very innovative and disruptive company with strong growth ahead via disrupting large addressable markets, it is also a classic story stock that is difficult to value given that the investment decision is often qualitative rather than quantitative. Thus, near- to medium-term performance is likely to be determined by expectations and delivering on targets. While we are positive on the long-term opportunity, the stock appears to fairly balance medium-term assumptions with execution risk."

"To that end, we believe that Tesla is essentially learning how to become a manufacturing company on the fly. While we don’t have meaningful reason to doubt that Tesla can eventually achieve its targets, doing so in a timely manner without some growing pains could prove challenging. Failure to hit near-term objectives may not impact the long-term view but could hold back the stock or provide a more favorable risk/reward entry point."

Price target: $309 (from $299)

"Though Q3 was strong, several items should be considered," Evercore ISI analyst George Galliers said.

"First, Model 3 margins (at >20%) were impressive. Yet, Tesla acknowledged that ASPs and mix will decline over time. Second, operating expense was $133 million lower sequentially in Q2; a positive development which assisted profitability but one which is not expected to persist in Q4 or outer years."

Price target: $250 (from $200)

"Cash improvements bode well for short term debt repayments, but we remain concerned about competition," said Jeffrey Osborne at Cowen.

He continued: "The company's cash balance (less deposits) and working capital have been a concern for investors for the past several quarters. Tesla's working capital and cash position improved in 3Q18, softening near term liquidity concerns, which should allow debt holders with shorter maturities to breathe a sigh of relief. Financing needs are likely satiated for the next 6 to 9 months, but we remain cautious on liquidity as management needs to execute on its plans to retire and not refinance its debt."

"We continue to question the U.S. demand for the Model 3 in a post tax credit environment," he said. "We believe the company will attempt to follow a similar "dutch auction" strategy in those markets by first shipping high priced vehicles to keep overall Model 3 margins stable as the U.S. mix shifts to primarily the mid-range version. We note the competitive market will be steeper when Tesla launches in Europe given the bevy of new introductions from European OEMs."

Price target: $225

"With strong results showing better execution and positive FCF, TSLA was able to deliver above its targets in the quarter," said David Tamberrino at Goldman Sachs.

"However, we believe the goals the company is putting forward now likely have less potential for upside surprise (targeting another quarter of positive FCF and a long-term Model 3 margins of 25%) and we question if we are going to see much better results than the company delivered. Further, we believe the strength the company saw this quarter was aided by higher priced Model 3 variants and believe the eventual $35,000 price point on this vehicle may make it more difficult for TSLA to see similar tailwinds."