Hedge funds cut NFLX, keep big bets on MSFT, AMZN, add NVDA
Investing.com -- UBS lowered its price target on Tesla (NASDAQ:TSLA) to $225 from $259 in a note Monday, citing weaker-than-expected deliveries and margin pressure.
The firm now sees 30% downside to consensus 2025 earnings per share (EPS) and believes Tesla’s stock is trading at an excessive valuation relative to its fundamentals.
UBS cut its first-quarter 2025 delivery forecast to 367,000 units, down from 437,000, reflecting a 5% year-over-year decline and a 26% drop sequentially.
The firm noted that "the current run-rate may be slower" and expects Tesla to rely on "more promotional activity" to meet targets.
UBS Evidence Lab data indicates "low delivery times for the Model 3 and Model Y (generally within two weeks) in key markets," suggesting demand softness.
The firm also revised its full-year 2025 delivery forecast to 1.7 million units, representing a 5% decline, which is 14% below consensus expectations of 10% growth.
While Tesla’s upcoming Model Y refresh (codenamed Juniper) could help demand, UBS believes orders remain muted, citing "competition from the old Model Y" and a challenging pricing environment in China.
As a result, UBS now expects Tesla’s 2025 EPS to be $2.02, down from its prior estimate of $3.16 and about 30% below consensus. The firm also cut its 2026 EPS forecast to $2.81 from $3.99.
While UBS acknowledged Tesla’s long-term AI opportunities, including robo-taxis and humanoid robots, it believes these are longer-dated prospects already factored into the stock’s premium valuation.
At its revised target of $225, Tesla would still trade at 111x 2025 EPS, which UBS considers "more than two standard deviations above the NTM average since 2022."