Goldman Sachs downgraded Tesla, Inc. TSLA from Buy to Neutral while upping the 12-month price target.

Goldman Sachs justified its decision by highlighting the substantial surge in Tesla’s stock price. Analyst Mark Delaney raised the price target from $185 to $248.

Tesla has soared by an astounding 108% year-to-date, beating the S&P 500’s more restrained 13% gain. Tesla has increased by 38% in the last month alone, outpacing the S&P 500’s 5% growth.

Tesla’s outstanding performance is now properly reflected in its share price, Delaney said in a Sunday note.

Chart: TSLA Vs. S&P 500 Year-to-Date Performance

Tesla: What To Expect Next?

Goldman Sachs outlined both positive and negative factors that could impact Tesla’s performance over the next six to 12 months.

On the positive side, Delaney said Tesla’s deliveries in the second quarter of 2023 are on track, projecting volumes to align with the consensus estimate of 445,000-450,000.

On the negative, the analyst highlighted potential challenges arising from declining vehicle prices in the industry and a softening auto supply-demand landscape.

Several downside risks could stymie Tesla’s growth, including larger-than-expected vehicle price reductions, increased competition in the EV market and potential delays with critical products and capabilities such as Full Self-Driving (FSD), the third-generation platform and the 4680 battery cells, he said.

Despite the downgrade, Goldman Sachs adjusted its 12-month price target from $185 to $248, amid Tesla’s market dominance, which the firm said places the EV maker in a favorable position for long-term growth. Yet Goldman Sachs’ 12-month target price is lower than the current market price of Tesla ($256).

Stock Reaction: Tesla Falls Premarket

Tesla is down 1.4% in premarket trading on Monday, after closing 3% lower on Friday.

The EV maker is presently down nearly 8% from its June high of $277 on Wednesday, June 21.

According to Benzinga’s recent technical analysis of Tesla, the company’s stock is headed for its next level of support at $235, which corresponds to the 23.6% Fibonacci retracement level of the range from high to low in 2023. This is also the closing price on June 8, before Tesla soared higher.

If Tesla fails to hold above that level, bears may gain enough confidence to target the $190-$200 zone, which corresponds to June lows as well as the supports provided by the 50-day and 200-day moving averages.