Berenberg Downgrades Tesla (TSLA:NSD) to a Hold Rating on Valuation

Berenberg Alters Coverage on Tesla

Berenberg(RANK#24) analyst Adrian Yanoshik downgrades Tesla (NASDAQ:TSLA) from Buy to Hold and raises the 12 month price target from $200 to $210.

Berenberg believe that Tesla’s current valuation is high and leaves less room for disappointment. They previously upgraded their rating on the stock in late January, which contributed to a 21% increase in its value since then. They argue that Tesla can take market share with a gross margin of around 25%, excluding credits, which is in line with investor expectations for 2024.

However, the analysts prefer automakers elsewhere in their coverage due to Tesla’s current valuation, with the shares priced at a 2025E P/E of 25x and EV/sales of 4.5x. They view Tesla’s recent price cuts as an investment in growth, with the company focused on increasing volumes, which will likely sacrifice near-term margins. This, in turn, will position them competitively against new electric vehicle launches as their Berlin and Austin plants ramp up, replicating the low-cost processes of their Shanghai factory.

Despite the downgrade in their rating, Berenberg remains bullish on Tesla stock in the long term, highlighting the significant opportunity in the smaller vehicle segment. The analysts estimate that this new segment could expand Tesla’s total addressable market by roughly $1 trillion, making it 75% larger based on their forecasted market size in 2026. However, they model a slow rollout in the segment, not breaking through a 1 million vehicle delivery run-rate until 2028.

While the analysts have lowered their EPS outlook for 2023 to $4.00, they have raised their price target to $210 per share (from $200) based on increased cost efficiencies in the outer years. Overall, the analysts believe that Tesla’s current valuation is high, but they remain optimistic about its long-term prospects, particularly in the smaller vehicle segment.

TSLA Ratings by Stock Target Advisor

TSLA Price Forecast & Analysis

According to 46 analysts, the average target price for Tesla Inc over the next 12 months is USD 231.12, with an average analyst rating of Buy. Stock Target Advisor’s analysis of Tesla Inc is Slightly Bullish based on 11 positive signals and 5 negative signals. Tesla Inc’s current stock price is USD 187.71, which has decreased by -8.75% in the past week, -4.62% in the past month, and -30.01% in the last year.

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