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Tesla Inc. stock got hit but another downgrade on Thursday, this time from a known Tesla bull, who acted on valuation and said that the EV maker will likely continue to lower its vehicle prices amid increased competition.
The analyst, Adam Jonas at Morgan Stanley, downgraded his rating on Tesla stock
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to the equivalent of hold, from buy. He increased his price target on the stock to $250, from $200, representing a downside of about 4% against Thursday prices.
“I have to be up-front with you all. While the team has defended the Tesla OW
rating all year, I did not see this 111% [year-to-date] rally coming,” Jonas said in his note Thursday.
Tesla shares have shot higher in recent months boosted by investor sentiment around AI and as U.S. automakers have moved to adopt its fast-charging standard connection, the latest of which being Rivian Automotive Inc.
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on Wednesday.
See also: Tesla’s EV charging standard is becoming widely adopted, in another boost for the stock
Tesla’s shares on Wednesday got a downgrade from analysts at Barclays, who warned that the stock’s rally has been “too sharp.”
The move to the cautious hold rating notwithstanding, Jonas said Tesla “remains a ‘must own’ company in any EV portfolio,” with “evidence” that Tesla is emerging as a dominant player in the industry that goes beyond the deals around its Supercharger network.
“Despite the recent rally, we expect material negative revisions for Tesla consensus earnings forecasts and continue to expect a long-term trend of price downs/ATP declines at Tesla driven by intensifying competition with Chinese EV players and a slowing auto consumer,” Jonas said.
Jonas forecasted adjusted EPS of $3.03 in the year, which is about 10% below FactSet consensus of $3.36.
The 111% rally for the stock so far this year compares with gains of about 14% for the S&P 500 index.
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