Tesla loses bull rating at Jefferies due to margin worries
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Jefferies lowered its rating on Tesla (NASDAQ:TSLA) to Hold from Buy on Wednesday over concerns about the impact on margins from aggressive pricing to take market share.
Analyst Philippe Houchois warned the strategy to prioritize growing volume over higher sales margins while logical, will also shift investor expectations. "However fascinating the investment case remains, relative price aggression is not supportive of a high multiple investment case while unfolding," he stated.
Houchois sees a period of when Tesla (TSLA) earnings will lag investor expectations. Notably, he also thinks the company needs to catch up in some underappreciated areas. "With multiple technical edges from software to batteries and manufacturing productivity, Tesla clearly over-performs on engineering but has fallen behind in building skills in marketing and product planning," he noted.
Jefferies lowered its price target on TSLA to $185 from $230.
Shares of Tesla (TSLA) were up 0.13% premarket to $160.88. The EV stock has dropped 17% over the last four weeks.
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