NEW YORK (TheStreet) -- Shares of Tesla Motors (TSLA) are slumping, down 2.43% to $193 in pre-market trading Wednesday, after the electric car maker had its price target lowered by analysts at Morgan Stanley to $290 from $320 this morning.
Analysts at the firm maintained its "overweight" rating, but cut its volume estimates on Tesla Model 3 to reflect lower long-term oil prices and progress in internal combustion technology.
Morgan Stanley cut its forecast for 2018 to 40,000 units, and total deliveries by 2020 to 297,000 units, compared to Tesla's target of 500,000 units.
The firm also lowered its estimate for 2028 units to 400,000 units from 776,000 units.
However, Morgan Stanley raised its ATP estimate to a range of $55,000 to $60,000 from its previous $40,000 to reflect a lower mass market, but more affluent buyer.
Separately, TheStreet Ratings team rates TESLA MOTORS INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate TESLA MOTORS INC (TSLA) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Automobiles industry. The net income has significantly decreased by 94.1% when compared to the same quarter one year ago, falling from -$38.50 million to -$74.71 million.
- Net operating cash flow has significantly decreased to -$28.00 million or 127.35% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The debt-to-equity ratio is very high at 2.60 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, TSLA's quick ratio is somewhat strong at 1.38, demonstrating the ability to handle short-term liquidity needs.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Automobiles industry and the overall market, TESLA MOTORS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- TESLA MOTORS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TESLA MOTORS INC continued to lose money by earning -$0.71 versus -$3.70 in the prior year. This year, the market expects an improvement in earnings ($0.60 versus -$0.71).
- You can view the full analysis from the report here: TSLA Ratings Report