Tesla (TSLA) stock gains as Citi upgrades to Neutral on improving risk/reward

Shares of Tesla (NASDAQ: TSLA) are up almost 2% in pre-open Wednesday after Citi analyst Itay Michaeli upgraded to Neutral from Sell.

The analyst believes the valuation is more justified now after the recent pullback in Tesla stock that has created a more balanced risk/reward in the near term. The analyst also raised the price target to $176 per share, from $141.33, to reflect a higher multiple.

Michaeli highlighted the three key points:

1. Some of the prior baked-in expectations that Citi didn’t agree with are out of stock;
2. Citi is slightly above consensus for Q4-2024E EPS despite reduced near-term EPS estimates; and
3. Macro/competitive concerns are likely to remain an overhang with capacity rising.

“In a hard landing scenario Tesla’s LT competitive position likely also improves and potentially further enhanced by IRA,” Michaeli added in a client note.

The analyst also weighed in on the discussion of what would need to happen for Citi to get more bullish.

“We’d like to gain added confidence on the ASP/auto gross margin bridge (including tracking NT datapoints in China and Europe) and FSD progress. Under the current macro, we’d like to build more conviction, so for the time being we regard risk/reward as balanced here,” the analyst concluded.

Tesla stock price is down over 50% YTD.

By Senad Karaahmetovic

You May Also Be Interested In

• Tesla (TSLA) pivoting back towards cheap EV cars 'raises more questions' - Deutsche Bank
• TechnipFMC (FTI) PT Raised to $30 at BTIG
• JPMorgan Downgrades Beijing Easpring Material Technology Co Ltd. (300073:CH) to Underweight