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On Monday, Redburn-Atlantic reaffirmed their Sell rating on Tesla stock (NASDAQ:TSLA) with a consistent price target of $160.00. The firm’s analysis suggests a challenging year ahead for the electric vehicle manufacturer due to anticipated stagnant sales volumes, as no new vehicle launches seem imminent. Concerns were also raised regarding the potential impact of sluggish vehicle registration data, which might indicate ongoing demand issues. According to InvestingPro data, Tesla’s stock has declined nearly 35% year-to-date, with current market capitalization standing at $845 billion and a P/E ratio of 117, suggesting rich valuation levels despite recent price declines.
Tesla is expected to face cash flow pressures as a result of increased inventory levels leading up to the refreshed Model Y deliveries that commenced in March. While InvestingPro analysis shows Tesla maintains strong liquidity with a current ratio of 2.02 and holds more cash than debt, the possibility of new U.S. tariffs on imports from Mexico could further strain the company’s finances. These factors contribute to Redburn-Atlantic’s decision to revise downward their forecast for Tesla’s fiscal year 2025 earnings per share (EPS) by 5%. The company’s gross profit margin stands at 17.86% on revenues of $97.69 billion.
The firm also expressed apprehensions about the risk of Tesla disappointing investors with its early April delivery report and the subsequent first-quarter results. Redburn-Atlantic has adjusted their delivery estimates downward based on vehicle registration data up to February and the heightened inventory levels associated with the transition to the updated Model Y.
The analyst from Redburn-Atlantic, Adrian Yanoshik, commented on the situation, stating, "We foresee another year of stalled volumes without an imminent new vehicle launch. Sluggish registration data to-date may flag a lingering demand challenge." He also noted the potential financial burdens Tesla might face, saying, "Meanwhile, we expect cash flows to strain under higher inventories into refreshed Model Y deliveries, which began in March. Possible US tariffs on imports from Mexico adds a cost overhang."
The firm’s outlook is cautious as they anticipate the upcoming delivery report and first-quarter results could reveal underlying issues with Tesla’s performance. Yanoshik concluded by highlighting the risks, "We foresee a rising risk of disappointment into Tesla’s early April delivery report and subsequent Q1 results. Ahead of its disclosures, we lower our delivery expectations based on vehicle registrations through February and elevated inventories associated with the Model Y changeover."
In other recent news, Tesla has been the focus of several analyst updates and developments. UBS revised its financial outlook for Tesla, lowering the price target from $259 to $225 while maintaining a Sell rating. This adjustment is due to a reduced delivery forecast for the first quarter of 2025 and a significant drop in expected auto gross margins. Erste Group also downgraded Tesla from Hold to Sell, citing challenges in the Chinese market where local competitors are gaining ground with more advanced and affordable electric vehicles.
Additionally, Tesla’s average selling price has decreased, and its sales guidance for 2025 has been revised to indicate unspecified growth. On a more positive note, TD Cowen raised Tesla’s rating to Buy, setting a new price target of $388. The firm is optimistic about Tesla’s potential catalysts, including new vehicle launches and advancements in autonomous technology. Meanwhile, SpaceX, another company under Elon Musk’s leadership, experienced a setback with a Starship test failure, prompting an FAA investigation. Despite this, SpaceX remains committed to improving the reliability of its rockets for future missions.
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