Tesla’s (TSLA-US) stock has fallen sharply over the past few days, which has attracted the attention of a well-known short-seller analyst on Wall Street.
Citi analyst Itay Michaeli upgraded Tesla’s rating from “sell” to “neutral” on Wednesday (23rd), believing that the company’s market value has fallen by more than 600 billion from its November 2021 high. Dollar, that’s almost over the top.
“We think the YTD pullback has balanced near-term risk-reward,” he wrote in a note to clients.
He offered several reasons for the upgrade based on valuation:
1. As the estimated P/E ratio in 2023 shrinks to about 30 times, some expectations that were previously disagreed no longer exist;
2. Slightly higher than consensus EPS expectations for Q4 to 2024, even though the latest model update resulted in lower near-term EPS estimates;
3. To be sure, macro and competitive concerns may still exist as capacity ramps up, but as previously expected, in the most pessimistic scenario, Tesla’s long-term competitive position may also improve and May be further strengthened by the “Inflation Reduction Act”.
McCoy’s new target price for Tesla is $176, up from $141.33 previously. Shares of Tesla rose 1% in premarket trading on Wednesday.
Other Wall Street upgrades on Tesla stock may wait until the end of the year, largely a plunge in recent months that partly reflects concerns that CEO Elon Musk is distracted by Twitter.
Shares of Tesla have fallen 20% in the past month alone, while the S&P 500 has risen 6.6% over the same period.
Wedbush analyst Dan Ives (Dan Ives) warned, “For Tesla investors, the past few months have been very tense, because they have been repeatedly hit by Musk’s random tweets, and in early January. The stock will remain deep in the rocks until delivery numbers are released to better understand deliveries and production in 2023.”
Ives, a long-term Tesla bull, removed the stock from Wedbush’s list of top ideas earlier this month.