On Thursday, Morgan Stanley adjusted its outlook on Tesla Inc (NASDAQ:TSLA), reducing the share price target to $310 from the previous $320. The firm maintained its Overweight rating on the electric vehicle manufacturer's shares. The revision follows Tesla's first-quarter update, which was perceived as indicative of the competitive pressures within the electric vehicle industry.
The analyst from Morgan Stanley indicated that the revised full-year 2024 delivery estimate for Tesla is now 1.75 million units, marking a 3.3% year-over-year decline. This updated forecast suggests that Tesla may experience a cash burn of approximately $2.3 billion for the fiscal year, according to the firm's estimates.
Morgan Stanley anticipates that the lowest point for Tesla's performance metrics may occur by the second-quarter results. The firm expects that this will precede a significant revitalization of Tesla's model lineup, which could positively impact the company's financials and market position.
Despite the lowered price target, Morgan Stanley reaffirms its Overweight rating, signaling confidence in Tesla's long-term prospects. The firm suggests that the current challenges are temporary and that the automaker's outlook could improve with the upcoming refresh of its vehicle models.
InvestingPro Insights
In light of Morgan Stanley's recent price target adjustment for Tesla Inc (NASDAQ:TSLA), it's worth considering additional data and insights. According to InvestingPro, Tesla holds more cash than debt on its balance sheet, which may provide a cushion against the competitive pressures and potential cash burn highlighted by Morgan Stanley. On the flip side, InvestingPro Tips indicate that analysts have revised their earnings downwards for the upcoming period, reflecting some concern about Tesla's near-term profitability.
InvestingPro Data shows that Tesla has a market capitalization of $536.26 billion and trades at a P/E ratio of 35.45, which is high relative to near-term earnings growth. The company's revenue growth in the last twelve months as of Q4 2023 was 18.8%, yet its stock price has declined significantly over the last three months. Despite this, Tesla's liquid assets exceed short-term obligations, suggesting a strong liquidity position.
For readers looking to delve deeper into Tesla's financial health and market performance, InvestingPro offers a wealth of additional tips, including insights on valuation multiples and profitability. To access these insights, consider using coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at https://www.investing.com/pro/TSLA. There are 20 more InvestingPro Tips available that could help investors make more informed decisions regarding Tesla's stock.
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