Morgan Stanley Lowers Tesla Price Target to $400
Morgan Stanley analyst Andrew Percoco lowered the price target on Tesla (NASDAQ: TSLA) to $400 (from $417) while maintaining an Equalweight rating.
“The capex step-up is a known trend, now confirmed and extended for the next 2-3 years, prolonging cash burn through the end of the decade on our estimates.
We view this as a necessary investment to establish and defend a leadership position in autonomy and robotics.
The open question remains the timing of when we actually see the ROI – specifically, a scaled robotaxi network that demonstrates increasing density and improving safety within existing cities, plus tangible progress commercializing Optimus.
Absent consistent, transparent proof points, we’d expect the market’s tolerance for incremental capex to narrow.
We are lowering our price target to $400 (from $417) reflecting increasing capex and worsening cash burn through the end of the decade. Our long-term estimates are broadly unchanged.
We assume lower gross margins in auto and energy carry through the remainder of the year, while continued R&D growth adds further margin pressure. In total, our 2026 adj.
EBITDA estimates decline by 7% with these changes.
This also carries forward to 2027 where we expect Energy margins to remain under pressure and R&D to continue to grow as Tesla further invests in Optimus, semi manufacturing, etc.
As a result, our 2027 adj. EBITDA estimate declines by 12%. The biggest change in our 2027 estimates is capex, where we now assume the company spends nearly $30bn (vs. $20bn previously).
Our higher capex and lower EBITDA estimates drives a FCF burn of ~$14bn in 2027 (vs. $5bn previously).”
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