was about as popular as it has ever been with Wall Street a few day ago. Now, analysts aren’t so sure.
On Monday, Wolfe Research analyst Rod Lache downgraded shares of Tesla (ticker: TSLA) to Hold from Buy. He doesn’t have a price target, either. His old target was $185 a share.
Lache said he is getting more concerned about weakening economic conditions that could impact car sales. Car loan delinquencies, for instance, are rising, which could signal weaker spending down the road by U.S. consumers, according to Wolfe Research Chief Investment Strategist Chris Senyek.
The downgrade weighed on shares to start the day, but Tesla stock closed up 0.6% Monday to $174.48. The
fell 0.2%. The
added 0.5%. The entire market fluctuated as events in the banking system unfolded.
It is the second downgrade for Tesla in the past few days. Tuesday evening, Berenberg analyst Adrian Yanoshik downgraded Tesla shares to Hold from Buy. He raised his price target, however, to $210 from $200 a share.
Yanoshik’s downgrade was more about valuation and taking some profits after Tesla shares overreacted to price cuts early in the year.
Tesla stock hit $101.81 on Jan. 6 after Tesla announced price cuts in China. Tesla has cut prices several times this year to boost demand and get more of its models to qualify for new U.S. tax credits.
After the shock of early 2023 price cuts wore off, investors came to believe the cuts were a sign of cost leadership and strength at Tesla. Coming into Monday trading, Tesla stock was up 70% since the Jan. 6 low.
After the downgrades, 53% of analysts covering the company rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 58%. The average analyst price target sits at about $198 a share.
In mid-February, about 66% of analysts covering Tesla stock rated shares Buy. That was as popular as Tesla stock has been with the Street since 2012 when 67% of analysts covering the company rated share Buy.
That was a very different time. Tesla stock was trading at about $10, its market capitalization was roughly $3 billion and 10 analyst covered the stock. Now 40-plus analysts cover Tesla and it’s the most valuable car company on the planet with a market cap of about $540 billion.
Downgrades have picked up some momentum as Tesla shares reached $200, putting them up roughly 60% year to date and up almost 100% from the January 52-week low.
Through Monday trading, Tesla stock is up about 42% year to date.
Looking ahead, Tesla will report first quarter deliveries early in April. Wall Street is looking for about 430,00 units sold in Q1, up from 405,000 sold in the fourth quarter of 2022. That will be the next big catalyst for Tesla stock that can send shares up or down.
Write to Al Root at firstname.lastname@example.org
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