© Reuters. Morgan Stanley cuts Tesla (TSLA) target after stock fell 30% below its bear case
By Senad Karaahmetovic
Shares of Tesla (NASDAQ:) staged a minor bounce yesterday after several days of intense selling pressure. Tesla stock is further up about 3.5% in pre-market Thursday as sell-side analysts continue to urge their clients to buy shares amid a significant pullback.
Morgan Stanley analysts are the latest to note that a selloff has created a buying opportunity in Tesla stock. They reiterated an Overweight rating on Tesla stock and cut the price target to $250 from the prior $330 per share.
“We believe Tesla may be in position to extend its lead vs. the EV competition in FY23 (both legacy and start-up) even before consideration of IRA (Inflation Reduction Act) benefits where Tesla also stands out as the biggest potential winner,” the analysts said in a client note.
They reiterated their previous stance that 2023 is likely to be a “reset” year for the electric vehicles (EVs) market as supply is expected to exceed demand.
“Within this environment, we believe players that are self-funded (non-reliant on external capital funding) with demonstrated scale and cost leadership throughout the value chain (from manufacturing to up-stream material supply) can be relative winners,” they added.
The analysts see an attractive entry point in Tesla as the stock approaches Morgan Stanley’s new bear case – $80 per share. The prior bear case scenario called for Tesla stock at $150 a share. Given that Tesla shares traded at around $105 a share in pre-market Wednesday, the prior model implied a 30% discount to Morgan Stanley’s bear case.
The lowered price target reflects slashed Q4 delivery estimates. Morgan Stanley analysts now expect Tesla to deliver around 399K units, which is approximately 30K below consensus.
Tesla stock price closed at $112.71 yesterday.