Stock market today: S&P 500 drops for fifth day as focus shifts to Powell’s speech
On Thursday, Barclays (LON:BARC) maintained an Equalweight rating on Tesla stock (NASDAQ:TSLA) but reduced the price target from $325.00 to $275.00. The adjustment follows Barclays’ analysis of the company’s first quarter performance, which suggested a challenging setup due to weak fundamentals. According to InvestingPro data, analyst targets for Tesla currently range from $120 to $515, with 12 analysts recently revising their earnings expectations downward for the upcoming period. Despite this, the firm indicated a potential for a positive market reaction if the narrative surrounding Tesla improves, particularly with a more engaged Elon Musk and the upcoming Full Self-Driving (FSD) event.
Barclays analysts, led by Dan Levy, expect Tesla to face a trough in gross margin, attributing this to a combination of decreased volume and production inefficiencies. This concern appears justified, as InvestingPro data shows Tesla’s gross profit margin at 17.86%, with the company trading at a demanding P/E ratio of 107.36. This anticipated decline in gross margin is a significant factor in the revised price target for Tesla shares.
The firm expressed concerns regarding Tesla’s volume outlook, adjusting expectations to project a decline in vehicle volume by 2025. The analysts believe this volume decline will be a critical question for the company moving forward, potentially impacting its financial performance and market valuation. With Tesla’s next earnings report due in 6 days, InvestingPro subscribers can access over 20 additional key metrics and insights to better understand the company’s financial health and growth prospects.
In his commentary, Levy remarked, "Key takes: 1. Confusing set-up on 1Q with weak fundamentals, but could see positive reaction on better narrative (more engaged Elon, FSD event); 2. Expecting trough gross margin driven by volume decline, production inefficiencies; 3. Question ahead on volume - we now expect ’25 volume decline."
Barclays’ updated stance on Tesla stock reflects a cautious outlook based on the current and anticipated challenges the electric vehicle manufacturer is facing. This price target adjustment is a direct response to the firm’s analysis of Tesla’s near-term financial prospects and operational issues.
In other recent news, TSMC and Tesla have both been in the spotlight as their earnings reports are anticipated to reflect broader tech investor sentiment amid ongoing tariff concerns. TSMC continues to show strong growth momentum as it enters the second quarter of 2025, maintaining its full-year guidance, which signals a steady outlook. Meanwhile, Tesla has faced pressure from tariffs impacting its first-quarter results, although it is capitalizing on trends in autonomous driving and robotics. Analysts from BNP Paribas (OTC:BNPQY) Exane have expressed concerns over Tesla’s performance, reducing the stock price target to $137 from $150 and maintaining an Underperform rating, citing potential risks from China and negative free cash flow. Piper Sandler also adjusted its outlook for Tesla, lowering the price target to $400 from $450 while retaining an Overweight rating, due to disappointing delivery numbers and anticipated low gross margins. Despite these challenges, Piper Sandler suggests that Tesla’s long-term prospects remain promising, with potential positive impacts from upcoming products and robo-taxi advancements. Additionally, the Magnificent Seven stocks, including Tesla, saw a slight rise in premarket trading amid speculation of a pause in auto tariffs by the U.S. government. This potential pause offers some relief to the market, although the administration’s plans to impose tariffs on other sectors continue.
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