Tesla (TSLA) stock earns upgrade to Buy on 'misguided pricing concerns'

Despite seeing a “softer demand picture” in 2023 facing the global auto manufacturers, Berenberg analysts led by Adrian Yanoshik upgraded Tesla (NASDAQ: TSLA) stock to Buy from Hold.

While Tesla shares moved lower in the closing months of 2022 on several catalysts, including price cuts, Yanoshik said such moves are “an investment in growth.” His new price target on Tesla stock stands at $200 per share.

“Tesla’s opportunistic post-pandemic price increases reached their limits through Q4 2022. Its rising production capacity into 2023 meant that Tesla was able to shift towards pricing its vehicles to drive volumes (sacrificing near-term margin), which positioned itself competitively against new EV launches. As Tesla’s Berlin and Austin plants ramp up, we expect production to replicate elements of Shanghai’s low-cost processes,” the analyst wrote in a client note.

Berenberg sees Tesla taking a market share at a gross margin that exceeds 25%. Moreover, analysts are more positive about valuation after shares lost roughly 65% in 2022 while Tesla’s upcoming Investor Day (March 01) offers a “near-term catalyst potential.”

Elsewhere in the broker’s coverage of Auto OEMs (original equipment manufacturers), Yanoshik downgraded General Motors (NYSE: GM) to Hold to reflect “caution in the mass-market segments,” and BMW (OTC: BAMXF) to Hold following recent outperformance.

Tesla stock is down over 1% in pre-market Monday after closing 11% higher on Friday.

By Senad Karaahmetovic

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