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Baird Downgrades Tesla (TSLA) to Neutral; Recommends Profit-Taking

January 9, 2020 4:10 AM EST
Get Alerts TSLA Hot Sheet
Price: $146.62 +3.22%

Rating Summary:
    22 Buy, 28 Hold, 13 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 15 | Down: 11 | New: 13
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(Updated - January 9, 2020 6:06 AM EST)

(updating comment)

Baird analyst Ben Kallo, a long-time bull, downgraded Tesla (NASDAQ: TSLA) from Outperform to Neutral with a price target of $525.00 (from $355.00).

The analyst comments "We are moving to the sidelines, admittedly battle-weary after a hard-fought several years, including ~20% outperformance over the last year. We think risk/reward is more balanced following recent stock appreciation; expectations (particularly on the buyside) appear to be fairly calibrated and we think the positive estimate revision cycle is in its latter stages. That said, we would not short the stock and remain positively biased over the long run."

Kallo highlighted:

  • After several years at an Outperform rating, which included contentious arguments with (evidently) high-conviction bears, we recommend profit-taking.
  • We would not be short the stock; even the most purportedly sophisticated short theses have been proven incorrect over our near decade of coverage.
  • Shares now fairly reflect future execution, in our view, including a smooth Model Y ramp; while this is certainly achievable, we believe there is some risk (as with any product launch).
  • While we think risk/reward is more balanced at current levels, we do see some upside risk and it is possible TSLA surpasses (raised) estimates.
  • Tactically Neutral and battle-worn after a contentious several years (including ~20% outperformance vs. the S&P 500 LTM), but we remain positively biased over the long run.

For an analyst ratings summary and ratings history on Tesla click here. For more ratings news on Tesla click here.

Shares of Tesla closed at $492.14 yesterday.



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Robert W Baird, Standard & Poor's, Tesla, Ben Kallo