On Friday, shares of Tesla Motors Inc. (NASDAQ:TSLA) reached the lowest they have been in the past six weeks. Just last week, shares of Tesla have declined every day. Friday’s closing price of $220.69 was the lowest since August 25th. On the same day, analyst Brian Johnson from Barclays weighed in with bearish sentiments.
Johnson downgraded Tesla’s stock from Equal-Weight to Underweight, while reducing his price target to $180, down from $190. According to the analyst, the stock is presently overvalued and does not factor in the risks and challenges associated with the company’s goal of becoming a mass-market OEM. Johnson says, “Our fundamental difference with the Tesla bulls lies around the company’s ability to become a successful mass-market.” The analyst added, “While the bulls believe Tesla will be the next Ford, we see many challenges ahead for Tesla and argue that ‘crossing the chasm’ is harder than it looks.”
Referring to Tesla’s launch of its latest SUV, Model X, Johnson said, “Launch events typically generate a run-up into the event, with some payback after. Yet last week’s X launch failed to boost the shares – indicating a lack of ‘story’-driven buying support.”
Johnson also feels that Tesla’s margins are likely overestimated. He explains, “Model X will provide yet another reality check on margins. We see several factors pushing margins below current consensus expectations – engineering challenges will lead to manufacturing challenges (i.e. “Elon’s headache”), the production ramp will be slow, and Tesla will be challenged in concurrent S/X production.”
Johnson projects that the company will miss its production guidance of delivering 50,000 to 55,000 cars in 2015. He also doubts whether the company will be able to release its upcoming Model 3 as per schedule in 2017.
As per TipRanks’ statistics, Brian Johnson has rated Tesla’s stock 16 times with a success rate of 50%. His average return on the stock is 33.2% when measured over a one-year horizon and no benchmark.
Out of 20 analysts who have recently rated Tesla on TipRanks, 9 have rated it as a Buy, 6 have rated it as Hold, and 5 have given a Sell rating to the stock. The average consensus price target for the stock is $293.88, an upside of 33.16% over current levels.