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On Tuesday, Morgan Stanley (NYSE:MS) reiterated its Overweight rating on Tesla stock (NASDAQ:TSLA), with a price target of $410.00. Currently trading at $342.09, Tesla has received mixed signals from Wall Street, with analyst targets ranging from $115 to $465. According to InvestingPro data, 22 analysts have recently revised their earnings expectations downward for the upcoming period. The firm’s analysis highlighted the competitive pressures from Chinese electric vehicle (EV) manufacturers, particularly Xiaomi (OTC:XIACF)’s latest offerings in the EV market. Adam Jonas from Morgan Stanley pointed out the impressive design and affordability of Xiaomi’s vehicles, comparing the YU7 small SUV favorably to luxury brands but priced similarly to mainstream models. Despite these challenges, Tesla maintains strong financial health with a current ratio of 2.0 and more cash than debt on its balance sheet, as revealed by InvestingPro’s comprehensive analysis.
Jonas emphasized the significance of Xiaomi’s entry into the automotive industry, noting that the YU7 is only the company’s second car. He recalled a conversation with Ford CEO Jim Farley during Ford’s Q4 2024 earnings call, where Farley expressed respect for Xiaomi’s SU7. Jonas suggested that it could take years for established automakers like Ford to match the innovation and design of Xiaomi’s products.
Looking ahead, Andy Meng of Morgan Stanley forecasts that by 2027, Xiaomi’s EV business could generate revenues of 233 billion Rmb ($32 billion), a figure comparable to Tesla’s automotive revenue in mid to late 2020. The report also anticipates the arrival of Chinese EVs in the U.S. market, arguing that the high quality of these vehicles will overcome trade barriers and could lead to partnerships with Western automakers seeking to integrate advanced technologies. Tesla currently generates annual revenue of $95.7 billion with a gross profit margin of 17.7%, though InvestingPro analysis indicates the stock is trading at premium valuations across multiple metrics. For deeper insights into Tesla’s competitive position and valuation, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
The analysis concluded that the market may have overly optimistic near-term expectations for Tesla’s automotive business, failing to account for the growing competition from China. Jonas believes this will influence international markets and is a driving factor behind Tesla’s strategic focus on autonomy, which extends beyond just cars.
In other recent news, Tesla announced the appointment of Jack Hartung to its Board of Directors and Audit Committee, effective June 1, 2025. Hartung, who brings over two decades of financial leadership experience, is transitioning from his executive role at Chipotle Mexican Grill (NYSE:CMG). Meanwhile, Cantor Fitzgerald maintained its Overweight rating on Tesla stock with a price target of $425, highlighting positive developments such as the planned launch of a Robotaxi service in Texas and a lower-priced vehicle in 2025. The firm also noted potential revenue growth from Full Self-Driving features, energy storage, and the introduction of the Tesla Semi Truck in 2026. Despite these advancements, Cantor Fitzgerald pointed out potential challenges, including macroeconomic conditions and the possible removal of the EV Tax Credit.
Additionally, Tesla shares were part of a broader tech stock recovery, following a downturn in the previous session. The Magnificent Seven group, which includes Tesla, saw varied movements, with Tesla shares experiencing a slight increase. In other developments, Tesla’s CEO, Elon Musk, plans to reduce his involvement with Dogecoin to focus more on Tesla. This shift is seen positively by analysts, as it may allow Musk to allocate more attention to Tesla’s strategic initiatives.
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