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On Monday, UBS analyst Joseph Spak adjusted the price target for Tesla (NASDAQ:TSLA) stock to $225 from the previous $259 while maintaining a Sell rating on the company. The stock, which has declined nearly 35% year-to-date and over 7% in the past week according to InvestingPro data, currently trades at a P/E ratio of 108x, suggesting a premium valuation compared to industry peers. Spak cited a reduction in the first-quarter delivery forecast for 2025, attributing the change to a slower current "run-rate" than previously expected. Despite this, the analyst anticipates a potential end-of-quarter sales push, which could be spurred by increased promotional efforts.
Tesla’s new delivery estimate for the first quarter of 2025 is set at 367,000 vehicles, a decrease from the initial 437,000 vehicle estimate that was established after fourth-quarter results in 2024. This revision represents a 5% year-over-year and a 26% quarter-over-quarter decline in deliveries. The updated forecast also falls 13% below the current consensus from Visible Alpha. InvestingPro analysis shows Tesla maintains strong financial health with a current ratio of 2.02, indicating sufficient liquidity to meet short-term obligations.
The UBS Evidence Lab has gathered data indicating that delivery times for Tesla’s Model 3 and Model Y are notably low, with vehicles generally available within two weeks in key markets. Spak interprets this as a sign of weakening demand for Tesla’s products.
Despite the lowered delivery expectations and indications of softer demand, UBS’s analysis suggests that Tesla may still engage in more aggressive marketing and sales strategies towards the end of the quarter to boost performance. The revised price target reflects the firm’s current assessment of Tesla’s near-term prospects in light of these factors. According to InvestingPro, Tesla maintains its position as a prominent player in the automobile industry, with an overall Financial Health score of "Fair" and 18 additional exclusive ProTips available to subscribers through the comprehensive Pro Research Report.
In other recent news, Tesla has been the subject of multiple analyst revisions and concerns. Redburn-Atlantic reaffirmed their Sell rating on Tesla, maintaining a $160 price target, citing concerns over stagnant sales volumes and potential cash flow pressures due to increased inventory levels. They also highlighted the risk of disappointment in Tesla’s upcoming delivery report and first-quarter results. UBS followed suit by lowering Tesla’s price target to $225, while maintaining a Sell rating, and adjusting their delivery forecast for the first quarter of 2025 to 367,000 vehicles, citing softer demand and reduced auto gross margins.
Erste Group downgraded Tesla from Hold to Sell, pointing to challenges in the Chinese market where local competitors are gaining ground with more affordable and advanced models. The analysts noted that Tesla’s product lineup appears outdated, and sales figures indicate a significant drop in volume. Additionally, Tesla’s sales guidance for 2025 has been revised to an unspecified level of "growth."
Meanwhile, in other company news, SpaceX, a company associated with Tesla’s CEO Elon Musk, experienced a setback when a Starship test ended in failure, prompting an FAA investigation. Despite this, SpaceX continues to work on enhancing the reliability of the Starship for future deep space missions.
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