Source: Sina Finance
US brokerage firm Bernstein said in a report this week that nothing can be proven$Tesla (TSLA.US)$The high share price is reasonable because its profit margins are on par with lower valued competitors.
More importantly, the electric vehicle company is not providing an obvious catalyst to spur future growth. Bernstein's analysts lowered Tesla's target share price from $150 to $120, meaning there is still 33% room to fall from the stock's closing price on Wednesday.
Tesla shares rose 1.22% on Wednesday to close at $179.83.
Analyst Bernstein, led by Toni Sacconaghi (Toni Sacconaghi), wrote: “Compared to traditional automakers and high-growth automakers, Tesla's stock price remains high in almost all valuation metrics, and compared to technology companies, its stock price also looks expensive compared to its lowered growth expectations.”
Bernstein said that although Tesla's stock price has dropped drastically, its valuation still has a huge premium compared to other car companies, which is six times that of other car manufacturers. This is because Tesla's historical growth rate was much higher, but things are different today.
“Tesla's current profit margin is comparable to that of an American original equipment manufacturer (OEM), and in some cases lower than the original equipment manufacturers in the US and Japan, and its future growth rate is closer to Toyota and Honda, and lower than BYD,” Sakonagi wrote.
Bernstein added that although Tesla's price-earnings ratio is higher than that of large tech companies, its profit margin is also much lower among such companies.
The report said that as the penetration rate of electric vehicles in Europe and the US slows, weak demand is weakening Tesla's production, and the launch of the new Model 3 in China failed to show a “stepped change” in demand.
Bernstein lowered Tesla's production forecast for this year to 1.98 million units, lower than the market's general forecast of 2.06 million units. The tepid growth will continue until 2025. However, Tesla is still expected to become the highest-selling car manufacturer in the world.
While optimistic investors may point out that Tesla's fully autonomous driving (FSD) technology is a transformative venture that should justify its share price over the long term, Bernstein notes that other manufacturers are also competing in this field.
The brokerage said Tesla is also unlikely to make progress in robo-taxi services as Waymo already dominates the sector.
Others also pointed to Tesla's adventures in robotics and artificial intelligence, including the release of Optimus and Dojo. However, Bernstein pointed out that just like in the field of autonomous driving, Tesla is already lagging behind, and Musk previously called Dojo “hopeless” at the earnings conference.
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