Morgan Stanley Downgrades Tesla’s Rating to Equalweight

Morgan Stanley analyst Andrew Percoco downgraded Tesla from Overweight to Equalweight with a price target of $425 (from $410).

“Assuming coverage of TSLA at Equal-weight, with a $425 price target, implying 6% downside.

Tesla is a clear global leader in electric vehicles, manufacturing, renewable energy, and real world AI and thus deserving of a premium valuation.

However, high expectations on the latter have brought the stock closer to fair valuation.

While it is well understood that Tesla is more than an auto manufacturer, we expect a choppy trading environment for the TSLA shares over the next 12 months, as we see downside to estimates, while the catalysts for its non-auto businesses appear priced at current levels, driving our EW rating.

We’ve conducted a full re-calibration of our Tesla model, adding in Humanoid valuation supported by our Morgan Stanley Global Humanoid team’s TAM work, expanding our robotaxi model with a proprietary market analyses, broadening our Network Services (including FSD) model, moderating our Auto and Energy forecasts, and a building an illustrative pay package dilution analysis.

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