5 big analyst AI moves: Nvidia guidance warning; Snowflake, Palo Alto upgraded
On Wednesday, Evercore ISI adjusted its outlook on Tesla (NASDAQ:TSLA) shares, reducing the price target to $235 from the previous $270. The firm maintained its In Line rating for the electric vehicle manufacturer. The revision comes amid broader market concerns and specific challenges facing Tesla, including extended weakness in the first quarter. The stock, currently trading at $230.58, has declined 42.9% year-to-date, with InvestingPro data showing it’s currently trading below its Fair Value.
Chris McNally, an analyst at Evercore ISI, pointed to several factors influencing the decision. Tesla’s share price recently fell below its 200-day moving average of $282, prompting questions about the company’s future trajectory. The downward revision reflects lowered expectations for fiscal year 2025 deliveries, now set at 1.75 million vehicles, down from 1.875 million, with potential risks bringing that number down to 1.7 million. Consequently, earnings per share (EPS) estimates for 2025 and 2026 have also been reduced to 22% and 29% below consensus, respectively. With a market capitalization of $741.66 billion and a P/E ratio of 104.35, Tesla maintains its position as one of the most valuable automotive companies globally. For deeper insights into Tesla’s valuation metrics and growth potential, InvestingPro subscribers have access to over 20 additional key financial indicators and expert analysis.
The price target adjustment was influenced by three main concerns: potential brand and volume erosion across all three major regions where Tesla operates, the perception that the "new variant" is merely a cheaper, less equipped version of the Model Y, and increasing skepticism about the advancement of Tesla’s autonomous vehicle technology. The latter point was underscored by the lack of significant progress on the Full Self-Driving (FSD) Tracker despite the complete rollout of version 13, with expectations that company milestones may shift to future versions indicating further delays. Despite these challenges, Tesla maintains strong financial health with a gross profit margin of 17.86% and annual revenue of $97.69 billion. InvestingPro analysis reveals the company holds more cash than debt on its balance sheet, suggesting financial stability amid operational challenges.
Tesla’s stock found some support at the $220 level, which McNally described as an important, potentially final, line of defense. This support level is critical for the stock, as it represents a technical threshold that could influence future price movements.
The updated price target from Evercore ISI reflects a valuation of 3 times revenue plus a 50% probability of a "call option," a term used to describe the potential for a significant upside from a particular event or development, in this case, Tesla’s future growth and advancements in technology.
In other recent news, Tesla has announced plans to double its vehicle production in the United States over the next two years, as revealed by CEO Elon Musk during a joint appearance with President Donald Trump. This announcement comes amidst ongoing challenges, including protests and a significant decline in the company’s stock price. Wedbush Securities has maintained its Outperform rating for Tesla, setting a price target of $550.00, while emphasizing the need for Musk to focus more on Tesla rather than other initiatives. The firm expressed concerns over Musk’s involvement with the Trump administration and the DOGE initiative, which they believe has affected the company’s public perception.
Despite these challenges, Tesla’s shares have shown signs of recovery, leading premarket gains among the Magnificent Seven stocks after a 15% drop, marking its worst day since September 2020. This drop erased all gains made since the election of Donald Trump. In a show of support, Trump announced plans to purchase a new Tesla vehicle following the sell-off. Meanwhile, Chinese electric vehicle manufacturers have seen a rise in stock prices, benefitting from a promising sales outlook and Tesla’s recent stock decline. This positive trend for Chinese EV makers contrasts with Tesla’s recent struggles, highlighting the different market dynamics at play.
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