StockBeat: Tesla Skids as Long-Time Bull Moves to Sidelines

Investing.com – Tesla (NASDAQ:) fell Thursday after a long-time bull suggested it is time to cash in on the electric automaker’s recent rally that has seen its shares more than double in just three months.

Baird analyst Ben Kallo, a known Tesla (NASDAQ:) bull, downgraded Tesla to neutral from outperform. Shares fell 2%.

“We are moving to the sidelines, admittedly battle-weary after a hard-fought several years, including (approximately) 20% outperformance over the last year… After several years at an Outperform rating, which included contentious arguments with—evidently—high-conviction bears, we recommend profit-taking,” Kallo said.

The remarkable turnaround in shares of Tesla, which have more than doubled over 90 days, saw the electric carmaker become the highest-valued automaker in U.S. history, boasting a value of $85 billion, topping the $80.8 billion set by Ford in 1999.

But en route to notching the historic milestone, Tesla shares are now fairly valued, leaving little road ahead in the near term, Kallo added.

“While we remain constructive on (the company’s) long-term prospects, we now believe estimates are properly calibrated—particularly on the buy side—and valuation appears more balanced.”

The electric automaker’s red-hot run was spurred by a surprise quarterly profit reported in October last year. Since then, reports of progress in China and record deliveries have continued the momentum.

Tesla delivered a record 112,000 vehicles in the fourth quarter of last year, taking the total to 367,500 deliveries, up 50% from 2018.

But some argued that the upswing in demand in the quarter was driven by consumers eager to make a purchase before subsidies for purchasing electric vehicles expire.

Tesla’s move into China, however, has the potential to ramp up deliveries, Deutsche Bank (DE:) suggested.

“While bears will likely argue 4Q deliveries benefited from strong purchases ahead of tax credits expiring in various countries, Tesla is just about to start deliveries of locally made Model 3s in the very large China market, at an attractive price point.”

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