©Reuters.Institutional investors expect Tesla stock to underperform in six months – Morgan Stanley
Morgan Stanley reiterated its Overweight rating on Tesla stock (NASDAQ:) with a price target of $345, but analysts say there's not much reason to be bullish on the electric vehicle (EV) giant at this point. Admitted.
Analysts shared takeaways from Tesla's “bull/bear” lunch held in New York City on Wednesday, saying investor sentiment toward Tesla stock was quite bearish.
“We expected institutional investors to be bearish given the recent negative sentiment towards the company's name. However, there was little attempt by the short-term bulls to make the case,” the analysts said. .
“Reading the room, it seemed like everyone felt the stock would underperform over a six-month period. Almost everyone felt the stock would underperform over a 12-month period,” they added. Ta.
Morgan Stanley said Tesla CEO Elon Musk was perceived to be distracting from the automaker's AI themes in 2024 and shifting investor focus to weakening EV demand. He pointed out that there was.
Meanwhile, it is believed that the EV market story needs to improve before investors can confidently invest in AI-related stories.
Regarding Tesla vs. 'Magnificent 6', the possibility that TSLA will not only be overlooked in the wave of AI investments, but also go against the trend of the AI market, is considered by many who are focused on momentum strategies in AI. Analysts commented that it may be undervalued.
Additionally, investors are wondering whether Tesla's sales growth could stall or even decline year over year from the 2 million unit utilization rate in the fourth quarter. The change in outlook from a company that once aimed for 50% annual growth has had a noticeable impact on investor sentiment, analysts wrote.
Despite the bearish mood, Morgan Stanley has not lowered TSLA's rating or price target.
“Our thesis about Tesla is that it's an auto stock, but also an energy and AI/robots company. In fact, our core auto business valuation ($75 per share) is only 22% of the $345 price target (downwardly revised from the previous $380 price tag on January 22),” analysts said.
Analysts acknowledged that any adversity in the global EV market is significant for Tesla and is expected to have a short-term negative impact on the stock price.
“But at the same time, we don't think investors should ignore the continued development of Tesla's other businesses, many of which are in automotive and other areas and are not included in the $345 target. We hope to learn more about this at Tesla AI Day in 2024. ”
