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The Tesla Analyst: Jefferies analyst Philippe Houchois downgraded Tesla stock from Buy to Hold but raised its 12-month price target from $500 to $650.
The Tesla Thesis: Houchois noted that the Elon Musk-led automaker may face some “execution risk” as the company expands in batteries and other segments.
“We see 2021 as a year when Tesla’s growth and earnings will accelerate with the roll out of 2 vehicles with high commonality but also an acceleration of investment in both capacity and batteries that add some degree of execution risk,” wrote Houchois.
The analyst noted that Tesla enjoys a “messianic” brand that has a reach beyond autos and this gives it a competitive edge. Nevertheless, he issued a caveat: “We don’t believe that Tesla can dominate the industry given the latter’s size, structure and politics.”
Jefferies downgrade comes at a time when Tesla’s stock has soared nearly 650% on a year-to-date basis. The company is due to be included in the S&P 500 index this month.
“Tesla in a league of its own,” Houchois explained, as per CNBC. “A lot happened in 2020 with next year a mix of delivery and high re-investment. Tesla remains self-funded but raising capital keeps pressure on Legacies.”
Price Action: Tesla shares closed nearly 3.7% higher at $627.07 on Wednesday and fell 0.35% in the after-hours session.
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