(News Bulletin 247) – UBS announced on Monday that it has downgraded its recommendation on Tesla, which it has reduced to ‘neutral’ from ‘buy’ previously, due to the recent stock market performance recorded by the manufacturer of electric vehicles.
In a research note, the Swiss bank estimates that the surge in the stock, which has taken more than 110% since the beginning of the year, does more than reflect the favorable reception which has had an impact on the level of demand after the price cuts decided by the group.
“The second quarter results validated this strategy in terms of price by showing only a limited drop of 400 dollars per vehicle from one quarter to another in the gross margin excluding regulatory credit, despite a decline in the average selling price per vehicle of 900 dollars”, underline its analysts.
But UBS believes that the stock’s upside potential is now ‘very limited’ now that this strong execution is reflected in share prices.
‘Unless the autonomous driving software FSD takes a big leap forward, the risk/return profile appears rather well balanced over a 12-month horizon’, concludes the German establishment, which raises its price target from 220 to 270 dollars.
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