Elon Musk both asset, 'considerable risk' to Tesla, per HSBC: 4 big analyst cuts
Investing.com — Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: a Sell initiation at Tesla, and downgrades at Ginkgo Bioworks, Navient, and Masonite International.
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HSBC starts Tesla at Reduce, sees 35% downside risk
Tesla (NASDAQ:TSLA) shares were falling 3.5% Thursday after HSBC initiated coverage on the EV maker with a Reduce rating and a $146 price target, which implies nearly 35% downside risk from Wednesday’s closing price.
The analysts assume that Tesla’s businesses, including Full Self-Driving (FSD), Dojo, and Optimus, will be successful by 2030 - but also indicated that the associated capital costs should be significantly higher than the group average due to regulatory and technological hurdles.
The analysts see Tesla’s CEO, Elon Musk, as both an asset and a risk, writing:
“Elon Musk’s global fame has afforded the group a customer awareness that far outweighs the money it has spent on marketing and advertising, which is therefore a tangible benefit to the P&L. Leaving aside the current legal issues Elon Musk faces, we think his prominence presents a considerable “singleman” risk at the group."
From a business fundamentals viewpoint, the analysts consider the timing of Tesla's vehicle deliveries to be a primary point of concern. Tesla has set an ambitious target to produce 20 million electric vehicles by the end of 2030, and the analysts say they "see considerable potential in Tesla’s prospects and ideas," but also "think the timeline is likely to be longer than the market and valuation is reflecting."
Shares were recently changing hands at $214.22.
Ginkgo Bioworks cut to Neutral after Q3 miss
BTIG downgraded Ginkgo Bioworks (NYSE:DNA) to Neutral from Buy following the Q3 EPS miss, as reported in real time on InvestingPro, and shares were lately dropping more than 13% Thursday.
The analysts noted that they "cited caution around the setup for DNA's cell program guidance heading into the Q3 call (and we were modeling below DNA's guide for 2023), and as it turns out, our fears were realized as DNA reported a Q3 miss on cell programs, and lowered its cell program guide for 2023."
They added, "This wasn't a major surprise to us, but for Ginkgo to make this adjustment in November after its Analyst Day is disappointing."
The analysts further cited broader economic factors, such as tough capital market conditions for many early-stage biopharmaceutical companies, which they believe could present continued challenges for Ginkgo into 2024 - as well as the company's recent shift toward a success-based pricing model. They wrote that, while the latter only comprises about 20% of its programs now, it could defer revenue prospects as this model might be expanded to other parts of the business.
Shares were recently trading at $1.29
Two more downgrades
Jefferies downgraded Navient (NASDAQ:NAVI) to Hold from Buy and cut its price target to $16.00 from $22.00. Shares were recently off 2.3% to $16.62.
Masonite International (NYSE:DOOR) shares fell 1% to $81.71 in recent trading after Stephens downgraded the company to Equal Weight from Overweight and cut its price target to $93.00 from $130.00.
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