Tesla is downgraded at Goldman Sachs as Wall Street continues to dial up caution on the EV stock
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Tesla (NASDAQ:TSLA) traded lower in early action on Monday after Goldman Sachs became the latest Wall Street firm to lower its rating on the electric vehicle stock. The cut by Goldman Sachs followed recent downgrades on Tesla (TSLA) by Morgan Stanley and Barclays.
Goldman Sachs moved to a Neutral rating from Buy on its view the share price now better reflects a positive long-term view on the automaker's growth potential and competitive positioning.
Analyst Mark Delaney and team said the primary reason for the change is the firm thinks the market is now giving the stock more credit for its longer-term opportunities after the recent rally. However, the firm is also cognizant of the "difficult pricing environment" for new vehicles that it sees as a potential drag on Tesla's (TSLA) automotive non-GAAP gross margin this year.
While Goldman Sachs boosted its estimates reflecting a more moderate rate of price declines going forward, the buying action on the EV stock sparked by the company opening parts of the charging network and the impact of AI on TSLA's full-self-driving product is expected to tail off.
Goldman Sachs set its price target on Tesla (TSLA) at $248 and the firm kept a positive view on parts of the EV sector.
"Importantly, we remain positive on EV adoption, and we continue to see the most investing opportunities among our broader set of suppliers, especially those with higher content to enable the shift to EVs and electrification."
Shares of Tesla (TSLA) fell 2.20% in premarket trading to $250.95 after dropping about 3.55% last week.
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Updated to reflect price target was not lowered