Tesla downgraded to Sell at UBS; valuation premium 'too significant,' analyst says
What is UBS's price target for Tesla and why?
UBS has a price target of $197 for Tesla. They believe this accurately values Tesla, its core auto business, and its other endeavors. The target is based on their valuation breakdown which finds that the market is valuing Tesla's core auto business at around $60-90 a share, with the "other" business making up the rest at around $175 a share. UBS analysts think those other businesses are worth around $93, meaning there is still a 60% premium attached to those businesses, which is a bridge too far for UBS.
Why did UBS downgrade Tesla to a Sell rating?
UBS downgraded Tesla to a Sell rating due to concerns over the company's valuation, with analyst Joseph Spak stating that the unidentifiable premium attached to the stock is "too significant." Spak acknowledges Tesla's potential in areas like AI, robotics, and autonomous tech but believes the market is overvaluing these businesses, leading to the downgrade.
What concerns does Joseph Spak have about Tesla's stock price?
Joseph Spak, a UBS analyst, has concerns about Tesla's stock price, primarily due to its rapid increase fueled by optimism over the company's artificial intelligence (AI) plans. He believes the premium attached to Tesla's future growth initiatives is too significant, and there is a risk that these growth opportunities may not materialize in the near future. Additionally, Spak highlights the lack of visibility in valuing Tesla's core auto business and other ventures, such as its energy business and full self-driving software.