Tesla Inc TSLA is continuing to disrupt the traditional automotive market.
“While we are bullish about Tesla's long-term potential, we have several near-term concerns,” Bernstein’s Daniel Chen said in a report.
Initiating coverage of Tesla with a Market Perform rating and a price target of $250, Chen mentioned that shares were “fairly valued at current levels.”
Tesla Advantages
Chen mentioned three key advantages that the company has:
- A lead in battery technology cost
- Unparalleled consumer awareness and brand
- Vertical integration “that is not only brand reinforcing, but creates material cost savings in distribution”
These advantages combined indicate a profitability advantage of more than 800 basis points in the long term, versus traditional OEMs [original equipment manufacturers], the analyst commented.
Related Link: Apple And Tesla: A Fairy Tale?
Near-Term Concerns
Among the several near-term concerns around Tesla, Chen mentioned the two most notable ones.
Gross margin
When capital expenditure associated with Model 3 ramps up
Overall customer experience
This doesn't seem to be strong right now and could get worse as Tesla migrates to selling to a more mass-market consumer. “A poor ramp and customer experience on Model 3 could not only impact Tesla's near-term financials, but undermine the franchise longer-term,” the analyst stated.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.