**: Global Market Broadcast.
Morgan Stanley analyst Adam Jonas cut Tesla's stock price target and fiscal 2024 earnings forecast on Tuesday, pointing to the company's product and market problems.
He lowered his price target on Tesla to $320 from $345 while maintaining an "overweight" rating.
In a note, the analyst pointed to several headwinds currently plaguing Tesla, including declining demand for electric vehicles, an outdated product lineup compared to other automakers, fierce competition and warfare in the Chinese market, and the growing popularity of hybrid vehicles rather than pure electric vehicles in the company's main market, the United States.
Jonas wrote: "If there is a chance that Tesla will report a GAAP EBIT loss on its automotive business at some point, it could be this year. ”
The analyst said he expects Tesla's results in the first half of this year to fall short of expectations, with GAAP operating margins in the range of 2-3%. After taking a severe hit to profitability, Jonas expects Tesla to roll back the price cuts it took to increase sales and instead shift its focus to defending margins and cash flow.
Jonas lowered his sales forecast for Tesla's fiscal 2024 to less than 2 million units, implying just over 10% year-over-year growth. He now expects the company's automotive business to have a gross margin of 11 percent this year4%, down from his previous forecast of 132%。
Still, the analyst is bullish on Tesla, as he still believes that Tesla is an artificial intelligence company. However, he said that for Tesla, as an AI company, it must first stabilize its profitability in the automotive business.
We believe that as long as the core car earnings are downgraded, Tesla will not gain the reputation of an AI company. He writes that this process may take several more quarters to complete, during which time the $100 in our bear market scenario may "work."