Morgan Stanley recently revised its price target for Tesla ($TSLA) from $345 to $320, maintaining an Overweight rating. According to analyst Adam Jonas, Tesla faces challenges in 2024, potentially leading to financial losses. The concerns stem from demand issues, price cuts, and increased competition in the market. Jonas emphasized the importance of stabilizing negative earnings revisions within Tesla’s auto business before fully recognizing its potential as an AI beneficiary.
Jonas highlighted Tesla’s broader innovations, including projects like Optimus, but cautioned that these were not factored into the lowered price target. Adjustments were made to Tesla’s 2024 forecasts, anticipating a decrease in deliveries to 1,998K units from the initial estimate of 2,077K. Other adjustments included a reduction in Auto GM ex-Reg Credits to 11.4%, adjusted EPS at $1.51, and free cash flow falling below $100M. Jonas suggested that Tesla’s first-half 2024 results might fall below expectations, and there could be a possibility of posting a GAAP EBIT loss. The management’s reluctance to confirm the bottoming out of auto gross margins further contributes to the challenging outlook for 2024, which is seen as an “investment year.”
Disclaimer: It’s important to note that these views represent the analyst’s perspective DYOR or ask your financial advisor before making any investment.
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