Tesla Inc. shares look set to extend their decline to a sixth consecutive session Wednesday following yet another bearish note from Wall Street analysts as pressure piles on the clean-energy carmarkers plans to turn a profit from its flagship Model 3 sedan. Citigroup analyst Itay Michaeli cut his price target on the group by nearly 20% to $191 per share, while maintain a sell rating, citing a negatively skewed risk/reward scenario in the companys near-term outlook linked to concerns over cash flow and customer demand.
Michaeli said the groups recent capital increase of $2.7 billion gives the balance sheet cushion against a 2019 downturn, but stressed the company needs to address its significant cash burn rate. Tesla shares were marked 2.2% lower in pre-market trading, indicating an opening bell price of $200.88 each, a move that would mark their sixth consecutive session decline and extend the stocks quarter-to-date slide to just over 28.
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Morgan Stanley analyst Adam Jonas lowered his bear case outcome for the stock price yesterday, a view based on a series of worst-case scenarios for Tesla, to $10 a share from a previous estimate of $97 amid increasing concern it could find itself trapped in a tech and trade war between Washington and Beijing.
Jonas has a $230 price target, with a equal-weight rating, under the stocks base-case scenario. Jonas argued that his estimate for Tesla sales in China, between 2020 and 2024, would generate around $9 billion in revenues. However, should officials in Beijing respond to the increasingly damaging trade war, and target Tesla with reprisal tariffs or restrictions, that figure could be sliced in half and carve more than $16.
4 billion in market value from the Palo Alto, California-based company. Our revised case assumes Tesla misses our current Chinese volume forecast by roughly half, to account for the highly volatile trade situation in the region, particularly around areas of technology, which we believe run a high and increasing risk of government/regulatory attention, Jonas said.
We believe as Teslas share price declines, the likelihood of the company potentially seeking alternatives from strategic/industrial/financial partners rises. Jonas also noted the rising cost of default protection for holders of Tesla bonds, who must pay more than triple the cost of similar protection for bonds issued by Ford Motor Co.
. Earlier this week, Wedbush analyst Daniel Ives cut his price target on the clean-energy carmaker to $230 from $275, citing major concerns with respect to its growth prospects and domestic demand for.....