Goldman Sachs on Monday cut Tesla to "hold"
equivalent rating, joining Morgan Stanley and Barclays, which downgraded the
stock last week. The brokerages, however, raised their price targets to reflect
the momentum in Tesla shares, which have soared 71% since late April and more
than doubled this year.
The EV maker's shares were last down 1.2% in morning trading
on Monday. Tesla's market capitalization of $813.29 billion far outstrips that
of Japan's Toyota (7203.T), which is the next biggest global car company by
market value.
The brokerages have attributed the rally, which has cost
short sellers $12.68 billion this year, partly to the company benefiting from
the buzz around Artificial Intelligence.
Tesla shares have also benefited from a string of positive
news in the past two months including deals struck by rival automakers Ford
(F.N) and General Motors (GM.N) for gaining access to its charging network, a
move that could make its chargers the industry standard.
A Tesla logo is pictured on a car in the rain in the Manhattan
borough of New York City, New York, U.S., May 5, 2021. REUTERS/Carlo
Allegri/File Photo
The stock also got a boost from China's announcement of a
520 billion yuan ($72.3 billion) package of tax breaks for EVs and other green
cars last week.
"While the market is now giving the stock more credit
for its longer-term opportunities, we are also cognizant of the difficult
pricing environment for new vehicles that we think will continue to weigh on
Tesla's automotive non-GAAP gross margin this year," Goldman analyst Mark
Delaney said.
Morgan Stanley and Barclays pointed out that Tesla's
earnings were still at risk of negative revisions as it battles competition in
China and may be forced to cut prices.
In April, Jefferies and Truist Securities downgraded Tesla
after it reported lower margins in its first-quarter results.
However, the brokerages reiterated that they saw strong
growth ahead with Tesla remaining a global EV leader. -Reuters