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Tesla Voltage Reduced at Jefferies on Valuation Concern

Tesla was downgraded to hold from buy at Jefferies, though the firm increased its price target on the electric-vehicle producer.
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Tesla’s  (TSLA) - Get Free Report run over the past few weeks has analysts at Jefferies concerned about the electric-vehicle producer's valuation, leading the firm to downgrade the stock to hold from buy.

Jefferies raised its price target on Tesla to $800 a share from $600. But that new target still represents 4.1% potential downside from the stock’s Monday closing price of $833.79.

At last check Tesla shares were down 2.9% at $810. The stock had dropped more than 9% in the three trading days through Monday.

The Palo Alto, Calif., company’s shares have jumped 60% since Jan. 14, and Jefferies says that at least some of this increase is well-deserved. 

Faster debt reduction, above-consensus growth guidance in cars and energy, and battery-industry news flow over the past six weeks are all reasons for the stock’s increase.

Jefferies is bullish on the auto segment, raising its price-target valuation for the division to $600 from $500 thanks to increased growth/profitability expectations.

The Jefferies note is mostly bullish. The firm calls Tesla one of the few EV manufacturers likely to grow earnings and return on capital investment over the next two years. 

The firm also expects five-year compound annual revenue growth to exceed 20% as Tesla ramps up Model 3 sedan and Model Y compact crossover production.

The $800 price target factors in Tesla pursuing additional growth in storage/generation and selling batteries to third party manufacturers. 

Jefferies has a market estimate for stationary storage cells between $90 billion and $235 billion by 2025 through 2030.