HSBC cuts Tesla stock price target to $120 from $125

On Thursday, HSBC analyst Michael Tyndall adjusted the price target for Tesla stock (NASDAQ:TSLA) to $120 from the previous $125, while maintaining a "Reduce" rating. The revision follows Tesla’s reported weak first-quarter deliveries on April 2 and the company’s announcement of several weeks of lost production. According to InvestingPro data, Tesla currently trades at $250.74, with analyst targets ranging from $115 to $465.70, reflecting significant market uncertainty. The stock has declined nearly 38% year-to-date, while maintaining a demanding P/E ratio of 136. Despite the anticipated weak quarter, Tesla’s actual auto gross profit fell short of consensus expectations by 11%, although it surpassed HSBC’s forecast due to better fixed cost absorption. InvestingPro analysis reveals that Tesla’s gross profit margin stands at 17.66%, supporting concerns about profitability. InvestingPro subscribers have access to 18 additional key insights about Tesla’s financial health and market position.

Tyndall noted that Tesla did not reaffirm its 2025 targets for auto volume growth and energy storage deployments, stating that an update on these figures would come with the second-quarter update. The analyst cited global trade policies and production ramp-up challenges at Tesla factories as reasons provided by the company for the lack of confirmation. However, Tyndall believes that Tesla’s challenges are more profound and structural in nature. This view aligns with recent InvestingPro data showing 20 analysts revising their earnings expectations downward for the upcoming period, suggesting broader concerns about Tesla’s near-term prospects.

The analyst pointed to an aging product portfolio, increasing competition not only in China but also from traditional original equipment manufacturers (OEMs) in the US and Europe, and brand issues as factors that continue to negatively impact Tesla. According to Tyndall, these elements suggest a more complicated backdrop for Tesla’s performance and future prospects.

Tesla’s first-quarter performance and the subsequent adjustment to its price target reflect ongoing scrutiny by market analysts. With the next update on the company’s outlook expected in the second-quarter update, investors and analysts alike will be closely monitoring Tesla’s strategies to address the challenges identified by HSBC.

In other recent news, Tesla reported a quarterly revenue of $19.3 billion, which was below Benchmark’s projection and the consensus estimate, but its gross margin matched expectations at 16%. Tesla’s energy division achieved record profits, contributing 25% to the company’s total, though supply chain issues remain a concern. Benchmark maintained a Buy rating with a $350 price target, highlighting future product launches and the Robotaxi business as potential growth drivers. Cantor Fitzgerald revised its price target downward to $355, citing global uncertainties, but remained optimistic about upcoming milestones like the Robotaxi service in Texas. Wedbush raised its price target to $350, noting Elon Musk’s renewed commitment to Tesla as a positive development. Oppenheimer reiterated a Perform rating, focusing on Tesla’s autonomous technology initiatives and associated challenges. William Blair maintained an Outperform rating, emphasizing Tesla’s strategic decisions and brand management amidst market recalibrations. These developments reflect a mix of optimism and caution among analysts regarding Tesla’s future prospects.

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