Market Overview

Morgan Stanley: Pricing, China Are Key Tesla Concerns

Morgan Stanley: Pricing, China Are Key Tesla Concerns
Related TSLA
Bulls & Bears Of The Week: Apple, Ford, Nike, Verizon And More
Elon Musk Talks GM, Marijuana And More In '60 Minutes' Interview
Right Back Where the Stock Market Started, But Worse (TalkMarkets)

Now that CEO Elon Musk’s proposal to take Tesla, Inc. (NASDAQ: TSLA) private is off the table, investors are once again focusing on the company’s vehicle production, fundamental performance and stretched balance sheet. Tesla’s third quarter is critical, according to Morgan Stanley. 

The Analyst

Morgan Stanley analyst Adam Jonas reiterated an Equal-Weight rating on Tesla with a $291 price target.

The Thesis

Average transaction price will be extremely important when Tesla reports its third-quarter numbers, Jonas said in a Thursday note. (See the analyst's track record here.) 

The analyst expects an ATP of $56,000 for the quarter, but said ATP of $60,000 or above cound drive meaningful earnings upside.

At the same time, Tesla’s Q3 performance may not be indicative of its longer-term outlook, Jonas said. 

“We believe the challenge for investors is to differentiate between what is achievable and what is sustainable." 

China could become problematic for Tesla as the international trade war drags on, the analyst said. China announced last month that it plans to levy a 40-percent retaliatory tariff on vehicles imported from the U.S.

Roughly 15 percent of Tesla’s total volume in 2018 has come from China, and the new tariffs would likely make the cost of its vehicles prohibitively high in China, Jonas said. 

Unless Tesla can deliver some upside surprise in Q3, the analyst said Tesla will likely need to raise $2.5 billion in additional equity capital by the end of the year.

Tesla has repeatedly said it will not need additional capital in 2018. Morgan Stanley assisted Tesla in its go-private bid before the effort was dropped Friday. 

Price Action

Tesla was slipping 1.31 percent to $301 at the time of publication Thursday and is now down 14 percent in the past six months.

Related Links:

Canaccord Cuts Tesla Price Target, Suggests New Company Leadership

Tesla Call Option Holders The Big Winners From Stay-Public Decision

Photo courtesy of Tesla. 

Latest Ratings for TSLA

Dec 2018JefferiesUpgradesHoldBuy
Oct 2018Canaccord GenuityMaintainsHoldHold
Oct 2018JMP SecuritiesInitiates Coverage OnMarket Outperform

View More Analyst Ratings for TSLA
View the Latest Analyst Ratings

Posted-In: Adam Jonas Morgan StanleyAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga


Related Articles (TSLA)

View Comments and Join the Discussion!

Latest Ratings

BAPItau BBAUpgrades274.0
DVNJP MorganDowngrades37.0
EOGJP MorganUpgrades118.0
EXPDGoldman SachsDowngrades68.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Bitcoin, Ethereum, Ripple Analysis: Optimal Technical Pullback To Test The New Yahoo Finance Service

Airline Stock Roundup: A4A's Labor Day Forecast, Delta's Route Changes And More