Bernstein Downgrades Tesla (TSLA) to Underperform, Current Valuation 'Mind-Boggling'

(Updated - July 28, 2020 6:47 AM EDT)

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Bernstein analyst Toni Sacconaghi downgraded Tesla (NASDAQ: TSLA) from Market Perform to Underperform, PT $900.00.

The analyst comments "We are downgrading Tesla from Market-Perform to Underperform, and maintaining our price target of $900. Let us be clear: this is a valuation call. Despite our relatively bullish stance on electric vehicle evolution, and structural advantages we believe Tesla may hold, we find it difficult to justify Tesla's current valuation even under our most bullish/imaginative scenarios.

We understand the bull case: that TSLA's margins could improve materially (favorable mix shift; new, local manufacturing facilities; Autopilot deferred rev recognition; EV credits); option value exists for new businesses; and that Tesla is a leader is a huge, underpenetrated market.

That said, Tesla's current valuation is mind-boggling – its EV has now matched Toyota and Volkswagen combined (who collectively make 20M cars vs. Tesla at 500K) and is up nearly 500% in less than a year – unprecedented for a large cap stock outside of the tech bubble. We struggle to translate our positive views on Tesla as a business into an *expected* value that is north of ~$900/share. Tesla now even looks expensive vs. large cap growth tech."

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 $1539.60 yesterday.

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