04:32 PM EDT, 09/23/2024 (MT Newswires) -- Tesla's (TSLA) third-quarter deliveries are expected to come in ahead of initial expectations amid stronger incentives in China that have helped boost sales, Tudor Pickering Holt said in a Monday note.

The brokerage now expects deliveries of 475,000 units, above the consensus estimate of 461,000 units. Shares of Tesla advanced 4.9% at market close on Monday.

TPH is modeling China deliveries of 178,000 units in the third quarter, jumping from 146,000 units the quarter prior. The growth reflects Tesla's "zero percent interest offerings" that helped spur demand, according to analyst Matt Portillo.

European sales are expected to slightly decline quarter over quarter to 76,000 units due to overall lackluster demand for electric vehicles while Model 3 and Model Y sales in the US and Canada are estimated to be relatively flat, according to TPH.

Cybertruck sales are forecast at 18,000 units for the third quarter, which Portillo called "relatively muted."

"Overall, it should be a good quarter for deliveries as we would expect consensus estimates to drift higher in the coming weeks," the analyst wrote.

However, investors will be focused on how Tesla's ramping of incentives will impact automotive gross margins, he said. TPH is forecasting a slight decline in automotive gross margins excluding regulatory credit to 14.1% in the third quarter.

It reiterated an earnings per share target of $0.67, which is above the consensus' $0.61 estimate. EPS will likely be supported by higher deliveries and "another robust quarter of contribution from the energy storage segment," Portillio said.

Price: 249.75, Change: -0.25, Percent Change: -0.10