Morgan Stanley Downgrades Tesla (TSLA) to Underweight Citing China, Others Risks

June 12, 2020 4:30 AM EDT
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(Updated - June 12, 2020 6:14 AM EDT)

(updated to expand analyst comments)

Morgan Stanley analyst Adam Jonas downgraded Tesla (NASDAQ: TSLA) from Equalweight to Underweight with a price target of $650.00 (from $680.00).

The analyst comments "We're Underweight due to our concerns around China, competition, capital needs and near term demand. The RR skew for TSLA is consistent with an Underweight rating."

Jonas says 1 risk is short term, the other 2 are long term:

Short Term Risk

  1. Demand/pricing. "Nearer term, we acknowledge that the company must continue to navigate challenges related to restarting its Fremont facility and confronting light vehicle markets that may not be as strong as pre-COVID levels. In recent weeks, Tesla has announced price cuts in China and the US across its model range that we had not previously incorporated into our forecasts, until now."

Long Term Risks

  1. China... "We believe any potential deterioration of relations with China could disproportionately impact Tesla vs. other stocks within our coverage. Our relative caution on China drives our view that Tesla shipments in the PRC peak at just under 500k units by 2027 and decline from there."
  2. Tech Competition... "In a post-COVID world, we believe fewer and more powerful players will be in position to deploy capital and talent to solving autonomy with a ‘play to win’ mindset. We see Amazon (and other tech players) as clear competitors, not partners vs. the likes of Tesla and GM."

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 $972.84 yesterday.

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