Tesla stock was handed a downgrade early Wednesday on expectations of disappointing first-quarter deliveries, vehicle price cuts and pessimism around the market for the EV giant's long awaited next-generation offering.
Wells Fargo downgraded Tesla to underweight, down from equal weight, Wednesday with a price target of 125, down from 200. The firm's underweight rating is equivalent to a sell rating and its price cut represents a 30% downside risk to current TSLA levels.
Wells Fargo expects Tesla unit volumes to disappoint as price cuts with its view that vehicle price cuts are having a diminishing impact on demand. The firm also wrote Wednesday that it believes that the economics of Tesla's next-generation vehicle, widely known as the Model 2, "are likely tough" as a mass market compact vehicle.
Meanwhile, late Wednesday UBS cut its Tesla stock price target to 165, down from 225, and maintained a neutral rating on the shares. UBS also lowered its Q1 delivery forecast to 432,000 units, from its previous 466,000 view. The firm also cut full-year deliveries to 1.96 million units, down from 2.02 million previously.
This comes after Everscore on Monday wrote that Tesla's new cheaper vehicle may not ramp up until 2027, with 500,000 units in 2026.
"Tesla increasingly is a '2027 story,'" Evercore analysts wrote.
Tesla Stock: Can It Rebound?
However, with Tesla stock down more than 28% in 2024, one longtime Tesla bull is still optimistic on the EV leader.
Wedbush Securities analyst Dan Ives maintained an outperform rating with a 315 Tesla stock price target Wednesday. The longtime Tesla bull wrote he expects around 430,000 Q1 deliveries, below Wall Street consensus of 487,000. Ives is optimistic that deliveries will track higher throughout the year.
The analyst noted that after just returning from a trip to Asia, it appears that many of the price cuts will be "starting to subside into spring/summer 2024 which is good news for Tesla and the EV industry."
Ives wrote that the "Tesla narrative is as negative we have seen in the last few years with Musk and Tesla getting attacked by the bears from all directions."
"We believe the stock is way overshooting on the negative front as the demand story for Tesla is more in stabilization mode heading to the rest of 2024," he said.
Tesla Stock Performance
TSLA shares fell more than 4% to 162.50 in market action Thursday, hitting new 2024 lows and levels not seen since May 2023. TSLA is down 19.5% in March.
With 2023 in the rearview mirror, analyst consensus now has 2024 Tesla earnings below 2023's level, signaling another year of negative growth for this growth stock.
Wall Street expects Tesla earnings per share of just $3.03 a share in 2024, according to FactSet. That would be a more than a 2% decline vs. last year's $3.12.
Morgan Stanley Tesla bull Adam Jonas last week issued an investor note in which he cut his Tesla 2024 earnings projections by 25%, saying that the EV giant could "potentially" lose money this year.
Jonas slashed his Tesla price target to 320, down from 345, but maintained an overweight rating on the shares. Jonas also whittled down his Tesla 2024 EPS projections to $1.51, his previous view was $2.04 per share, with auto gross profit margins, excluding regulatory credits, sinking to 11.4% as the analyst foresees continued demand issues for EVs.
The EV giant ranks eighth in the 35 member IBD Auto Manufacturers industry group. The stock has a 30 Composite Rating out of a best-possible 99. Tesla stock also has a 10 Relative Strength Rating and a 67 EPS Rating.
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