for the third time in as many days, Tesla (TSLAThe stock took a cut on Friday, as analysts expect waning consumer demand and increased competition in China to devalue Tesla. The stock fell on Friday after jumping about 2% on Thursday.
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DZ Bank downgraded Tesla shares to a sell rating, down from its previous buy rating. The company has a 210 price target on Tesla. The move from DZ Bank followed cuts from Morgan Stanley and Barclays this week.
On Thursday, Morgan Stanley downgraded Tesla to equal weight, from overweight, and raised its share price target to 250, up from 200 and about 5% below where shares closed Thursday.
The memo noted that Tesla is a beneficiary of artificial intelligence (AI) as well as a car company. Morgan Stanley’s view is that high expectations about artificial intelligence have led to Tesla stock reaching a fair valuation.
“We’re not trying to describe the ‘end’ of Tesla’s career,” Morgan Stanley analyst Adam Jonas explained Thursday. “And from our discussions (we) continue to find a significant degree of investor skepticism/lack of exposure around the name.”
Jonas added that despite the downgrade, Morgan Stanley sees Tesla as a “must have” in the electric vehicle portfolio and the industry “standard bearer” for electric transportation and the renewable energy economy.
“Despite the recent rally, we expect material negative revisions to Tesla’s earnings outlook,” Jonas told investors.
Morgan Stanley expects “intensified competition” from electric vehicle operators in China and slowing consumer demand for cars pose growing risks to Tesla shares. Jonas sees Tesla stock in a bull state of 450 and in a bear state of 90, over the next 12 months.
Tesla stock fell 0.9% on Friday during pre-market trading. On Thursday, shares jumped nearly 2%, to 264.61. Tesla shares fell 5.4% to 259.46 Wednesday. On Tuesday, shares jumped 5.3 percent to 274.31.
On Wednesday morning, Barclays analyst Dan Levy also downgraded Tesla shares to equal weight, after being overweight. Levy raised the company’s TSLA price to 260, up from 220 previously.
The Barclays analyst wrote that the stock’s recent rally has been “too sharp to challenge the near-term fundamentals.” Levy told investors that questions about margins and demand for Tesla cars remain a concern.
Tesla stock
TSLA advanced about 30% in June. Last week, the stock jumped more than 6% despite two straight sessions with losses.
Before stocks plunged last Wednesday, Tesla enjoyed 13 straight gains. Shares are up about 140% since Jan. 3. However, Tesla is down 36% from its all-time high of 414 in November 2021.
Tesla extends well past 207.79 buy points from any double-bottom cup or base.
The stock has crossed more than 30% of the 200-day/40-week moving average. This is the most extended since the stock peaked in November 2021.
Tesla stock ranks third in IBD Automotive Group. It has a composite rating of 99 out of 99. Tesla has a relative strength rating of 90 and its EPS rating is 93 out of 99.
Please follow Kit Norton on Twitter @employee for more coverage.
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