Cowen has an underperform rating and $210 price target on the stock, representing a potential 51% downside from the stock’s previous closing price above $420 a share. Tesla was down 3% to $413.11 Monday.
“Excluding the Netherlands and China, we expect Model 3 deliveries to be down,” Cowen analyst Jeffrey Osborne wrote. His estimate “highlights the demand saturation we are seeing across most mature markets as we shift from pent-up demand to steady flow demand.”
Cowen expects Tesla to deliver about 356,000 vehicles for the year, below the company’s October target range between 360,000 and 400,000 vehicles.
Despite the downside outlook for 2020, the firm did raise its fourth-quarter delivery estimate to 101,000 from 95,000 due to increased expected demand in the Netherlands and China.
Part of Osborne’s bear case is that Tesla has pricing and mix issues that will affect the company’s margins in the near term. And while China is a tailwind currently, he doesn't foresee demand staying strong in the long term.
Which leads to another reason Tesla was slumping Monday: Chinese rival Nio (NIO) - Get Report jumped more than 40% Monday after the company reported a narrower loss year over year than analysts were expecting while also reporting revenue that topped estimates.
“While Tesla has built a very dedicated fan base that has been willing to excuse poor build quality, customer service, and service infrastructure, we continue to be skeptical around broader adoption,” Osborne said.