(Bloomberg) — After losing nearly $300 billion in market value in two months, a growing chorus of Tesla Inc. analysts say the stock price decline has gone far enough, pushing the stock higher Wednesday.
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Morgan Stanley analyst Adam Jonas previously said Tesla is closing in on its $150 “bearish case” price target, providing investors with an opportunity to buy at a bargain price. Citi analysts upgraded the stock to sell-neutral, saying a more than 50% plunge this year “balanced short-term risk/reward.”
Despite challenges, including slowing demand and price cuts in China, Tesla is the only EV maker covered by Morgan Stanley that generates a profit on the sale of its cars, Jonas wrote in a statement. The analyst, who also highlighted Tesla’s potential to benefit from US consumer tax credits, reiterated his $330 price target.
Shares closed up 7.8% at $183.20 in New York. The stock has tumbled this year on rising raw material costs, issues with manufacturing and sales in China, and pressure on client budgets. Lately, CEO Elon Musk’s focus on flipping Twitter Inc. has also hit sentiment, with $300 billion wiped out of Tesla’s market cap over the past two months, according to Bloomberg calculations.
The distraction caused by Twitter must eventually stop the stock’s decline, according to Jonas. “There needs to be some form of sentiment ‘switch’ around the Twitter situation to calm investor concerns about Tesla,” he wrote.
Despite all the challenges Tesla has faced this year, Wall Street has remained primarily bullish. Most Tesla analysts tracked by Bloomberg rate the stock as a buy or equivalent, while the stock would need to rise as much as 57% to meet the analyst’s average price target. This year’s crash has left equity trading at 31x forward earnings, down from more than 200x in early 2021.
Citi analyst Itay Michaeli, who updated the stock Wednesday, has one of the lowest price targets on the road, at $176. The analyst said he was getting more positive because Tesla’s slump means some of the expectations overly bullish stock price, including unit sales, have been discounted.
–With assistance from James Cone, Esha Dey and Boris Korby.
(Updates stock movement in fourth paragraph. An earlier version of this story corrected Citi’s rating in the second paragraph.)
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