Tesla Gets Jefferies Downgrade As EV Maker Faces 'Execution Risk' In 2021

Jefferies has downgraded Tesla Inc TSLA, citing "execution risk" the automaker faces in 2021 amid product launches and an expansion drive, CNBC reported Thursday.

The Tesla Analyst: Jefferies analyst Philippe Houchois downgraded Tesla stock from Buy to Hold but raised its 12-month price target from $500 to $650.

The Tesla Thesis: Houchois noted that the Elon Musk-led automaker may face some “execution risk” as the company expands in batteries and other segments.

“We see 2021 as a year when Tesla’s growth and earnings will accelerate with the roll out of 2 vehicles with high commonality but also an acceleration of investment in both capacity and batteries that add some degree of execution risk,” wrote Houchois.

The analyst noted that Tesla enjoys a “messianic” brand that has a reach beyond autos and this gives it a competitive edge. Nevertheless, he issued a caveat: “We don’t believe that Tesla can dominate the industry given the latter’s size, structure and politics.”

Jefferies downgrade comes at a time when Tesla’s stock has soared nearly 650% on a year-to-date basis. The company is due to be included in the S&P 500 index this month.

See Also: Tesla Gets Downgrade From Long-Term Bull Pierre Ferragu, Analyst Says Time To Book Profits

“Tesla in a league of its own,” Houchois explained, as per CNBC. “A lot happened in 2020 with next year a mix of delivery and high re-investment. Tesla remains self-funded but raising capital keeps pressure on Legacies.”

Price Action: Tesla shares closed nearly 3.7% higher at $627.07 on Wednesday and fell 0.35% in the after-hours session.

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