Morgan Stanley cut its price target on Tesla as unexpected headwinds loom in the fourth quarter and 2023. While Tesla topped earnings expectations in its recent third-quarter report , analyst Adam Jonas said future estimates need to account for foreign exchange pressures, destruction of demand and inflated input costs. Revenue for the quarter came in lighter than expected. “We had expected Tesla to miss consensus expectations in 3Q due to input cost inflation and other disruption,” Jonas wrote in a note to clients Monday. “This didn’t happen. The company presented a rather bullish outlook for 4Q and beyond citing demand exceeding supply for the foreseeable future. However, given the highly volatile economic environment, we want to make room for unexpected headwinds into 4Q as well as into FY23.” Jonas trimmed the bank’s price target to $330 a share from $350, suggesting a 56% potential gain from Monday’s close. He attributed an $18 reduction to a low valuation for Tesla’s network services, a $4 reduction connected to the company’s core auto business, and a $2 gain from Tesla’s energy unit faring better than expected. In a bull scenario, he sees the stock rising as much as roughly 137% to $500 a share. Along with the price target cut, Jonas trimmed free cash flow estimates and noted lower average earnings per share expectations between 2023 and 2027. The stock is also vulnerable to a consumer slowdown. “While initial signs of a slowing consumer present itself in shrinking order-to-delivery times/reduced order backlots, we believe Tesla’s increasingly large size today and in the forecast makes it susceptible to what could be some profound swings in consumer strength and EV affordability,” he said. Tesla shares have slumped 40% since the start of 2022. Jonas expects more volatility ahead for shares given the situation in China and noted that the bank’s forecasts will increasingly become less reliant on China through 2030. — CNBC’s Michael Bloom contributed reporting
Sumber: www.cnbc.com
