New Tesla stock price target revealed by top analyst before earnings

Tesla shares edged higher in early Monday trading after a Wall Street analyst cut his price target on the group.

Tesla (TSLA) shares saw a slight increase in early Monday trading, although they were lagging behind the broader market. This comes after a prominent Wall Street analyst lowered his price target on the company just days before its fourth-quarter earnings report.

Tesla has been one of the worst-performing blue chips on Wall Street this year, and it is among the top five decliners on the S&P 500, with a 2024 slump of around 15%. The company has faced challenges such as fading EV demand, price cuts in key markets, and comments from CEO Elon Musk indicating a shift in focus towards developing the group's artificial intelligence potential. These factors have created significant headwinds for the world's most valuable carmaker.

Despite a record fourth-quarter delivery tally of just under 485,000 new vehicles and the launch of its long-delayed Cybertruck, Tesla's stock has continued to decline, losing over $235 billion in market value over the past six months.

With Tesla's fourth-quarter earnings scheduled for after the close of trading on Wednesday, Morgan Stanley analyst Adam Jonas, a respected Tesla watcher, is anticipating more negative news. He believes that the global EV market is experiencing an unfavorable balance of supply and demand, with momentum stalling and the market becoming oversupplied.

Jonas also noted that price cuts in China and Europe have exceeded his full-year forecasts, and disruptions in supply chains have led to production suspensions. Additionally, changes to foreign-part-sourcing rules have made fewer of Tesla's U.S. vehicles eligible for incentives, and global incentives are likely to weaken as governments reassess budgets in a slowing economy.

As a result, Jonas has cut his price target on Tesla shares to $345, while maintaining an overweight rating. Tesla shares were up 0.85% in early Monday trading, changing hands at $213.98 each.

Analysts expect Tesla to post earnings of 74 cents a share, down about 38% from the same period in 2022, with revenue rising 5.1% to $25.56 billion. Gross margins are expected to narrow to around 17.7%, compared to levels of around 25% over the fourth quarter of 2022.

Investors will also be looking at Tesla's 2024 delivery outlook, following a record 2023 tally of around 1.181 million, with analysts expecting a target of around 2.2 million. Short interest in Tesla remains elevated at the highest levels on Wall Street, indicating a cautious backdrop ahead of Wednesday's earnings report.

Investors have placed bets against the group of around $18.52 billion, or 3% of the stock's entire float, according to recent data from S3 partners.