It won’t be long now before Tesla (NASDAQ:TSLA) reports Q4 earnings with the EV leader slated to deliver its latest financial statement once the market action closes on Wednesday (January 24th).
Ahead of the anticipated print, it looks like one of Wall Street’s biggest Tesla bulls is, well, not quite as bullish as before.
Morgan Stanley’s Adam Jonas has been one of Tesla’s biggest supporters but even he thinks the tough times coming for the EV industry spell trouble. “Global EV momentum is stalling,” says the analyst. “The market is over-supplied vs. demand. We anticipate Tesla’s 2024 outlook to be cautious on volume and profitability. Our FY24 non-GAAP EPS falls below $2 (from the prior $2.41).”
There are several developments taking place that don’t sit well with Jonas. For one, the company has already notified of price cuts in China and Europe that matched or surpassed his prior expectations of price cuts for the whole of 2024.
Furthermore, governments are reevaluating their budgets, leading Jonas to brace for the potential weakening and dilution of global consumer EV incentives. In addition to this, there are reports of surplus manufacturing capacity in China, alongside a dip in demand resulting in reduced EV exports. Compounding these issues, Jonas notes a trend of individuals shifting back from electric vehicles to internal combustion engine (ICE) vehicles, painting a rather gloomy picture for the entire industry.
Given the above, then, while Jonas sticks with an Overweight (i.e., Buy) rating, his price target is lowered from $380 to $345. Nevertheless, that still remains one of the Street’s more bullish predictions and factors in growth of 64% in the year ahead. (To watch Jonas’ track record, click here)
However, what is also interesting about that target is that Jonas assigns only 22% ($75/share) of it to Tesla’s core auto business, and reminds investors that the company represents a play on a bigger theme and that it is “both an auto stock + an energy, AI/robotics company.”
“Negative developments in the global EV market very much matter to Tesla and should reasonably have a negative near-term impact on the price of the stock,” he said. “At the same time, however, we believe investors should not ignore the continued developments of Tesla’s other bets, many of which are auto-related…”
The rest of the Street is less confident, however; based on 10 Buys and Holds, each, plus 4 additional Sells, Tesla stock has a Hold consensus rating. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
