Tesla shares: Analysts cut price targets amid giant EV price cuts

A number of analysts lowered their price targets by Tesla (TSLA) Friday, coinciding with the electric vehicle giant’s decision to lower the price of its vehicles in the US and Europe. The cuts were aimed at making more of the company’s models eligible for U.S. tax credits. Tesla shares, along with other automotive stocks, fell on Friday.




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On Friday, Guggenheim analyst Ronald Evrizikov downgraded Tesla from neutral to sell with a price target of 89. Wells Fargo Co. (WFC) analyst Colin Langan also lowered the company’s price target on Tesla shares to 130 from 230 on Friday. However, Langan kept his rating on TSLA shares equal.

Evrizikov forecasts a “significant” fourth-quarter gross margin loss, driven primarily by price cuts and stimulus measures. Based on the latest price cuts in the US, as well as price cuts in Europe and China, Dzhyuzikov’s opinion is 650 basis points below the consensus gross margin estimate.

Evrizikov also told investors that estimates for 2023 “need to be revised” and that there are still indications that Tesla has a “short-term oversupply.”

Citygroup(C) Itai Michaeli was another analyst who lowered Tesla’s share price target. Michaeli revised down his target to 140 from 176 on Friday. Michaeli maintained a neutral rating on TSLA stock and was slightly more optimistic about Tesla than the Guggenheim Eurisics.

“We constructively appreciate Tesla’s strong global position in premium electric vehicles and, in particular, the company’s improvement in recent years,” Michaeli told investors.

Tesla shares

Tesla shares cut early losses to 3%, trading near 119.82 in early market trading on Friday. On Thursday, TSLA stock rose 0.3% to 123.56, still below its 21-day drop. Shares fell 0.8% on Tuesday after gaining 5.9% on Monday.

Tesla’s stock drop on Friday came as electric car giant Elon Musk slashed Model 3 prices in the US by 6-14%, depending on trim. The standard Model 3 RWD was cut $3,000 to $43,990. With the Inflation Reduction Act tax credit applied to the vehicle, consumers who meet the income caps will pay $36,240.

The Performance Model 3 trim was cut from $9,000 to $53,990, less than $55,000 in tax credits. Meanwhile, the base Tesla Y model was cut $13,000, or nearly 20%, to $52,990, also below the tax credit limit. The Performance variant for this car has been cut to $56,990, also down $13,000.

Tesla has also cut prices significantly in Europe, at least in Austria, France, Germany, the Netherlands, Norway, Switzerland and the UK. This comes amid signs of narrowing the backlog in Europe, with subsidies cut or eliminated in key markets such as Germany.

Evercore ISI (EVR) Analyst Chris McNally also valued Tesla shares on Friday. McNally calculated that such price cuts would “have a significant impact” on Tesla’s gross margin. McNally has a built-in rating and a price target of 140 for TSLA stock.

Tesla’s price cut also affected General Motors (GM) Ford Motor (F), Rivian (RIVN) and clear (LCID), among others. GM shares fell 5.2%. Ford fell 5.8%, Lucid fell 2.8% and RIVN shares fell 6.8%.

Please follow Keith Norton on Twitter @KitNorton for more coverage.

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