Tesla stock drop could be a buying opportunity, analyst says

After losing nearly $300 billion in market value in two months, a growing number of tesla Inc. analysts said the share price had fallen far enough to push the stock higher on Wednesday.

Morgan Stanley Analyst Adam Jonas said earlier that Tesla is approaching its $150 “bear market” price target, presenting investors with an opportunity to buy on the cheap. Analysts at Citi upgraded the stock to neutral from sell, saying a drop of more than 50% this year “has offset near-term risk/reward.”

Despite slowing demand and price reduction In China, Tesla is the only electric carmaker in Morgan Stanley’s coverage that makes a profit from car sales, Jonas wrote in a note. The analyst — who also highlighted the potential for Tesla to benefit from the U.S. consumer tax credit — reiterated his $330 price target.

Shares closed up 7.8 percent at $183.20 in New York. The stock has tumbled this year due to rising raw material costs, question Production and sales in China and pressure on customer budgets.Lately, CEO Elon Musk has focused on turning a profit Twitter Companies have also weighed on market sentiment, wiping $300 billion off Tesla’s market value in the past two months, according to Bloomberg calculations.

Jonas said the disruption caused by Twitter needs to end to stop the share price slide. “The situation around Twitter has to have some form of emotional ‘circuit breaker’ to calm investor concerns about Tesla,” he wrote.

Despite all the challenges Tesla has faced this year, Wall Street has largely remained bullish. Most Tesla analysts tracked by Bloomberg rate the stock a buy or equivalent, and the stock would need to rise 57% to hit analysts’ average price target. This year’s plunge has driven the stock’s forward price-to-earnings ratio down to 31 from more than 200 at the start of 2021.

Citi analyst Itay Michaeli upgraded the stock on Wednesday with one of the lowest price targets on Wall Street at $176. The analyst said he was becoming more bullish, as Tesla’s plunge meant some overly optimistic expectations for the stock, including expectations for sales, were now priced in.

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