Tesla, the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst Colin Langan from Wells Fargo maintained a Sell rating on the stock and has a $120.00 price target.
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Colin Langan has given his Sell rating due to a combination of factors impacting Tesla’s future performance. Despite a better-than-expected Q2 operating margin, Tesla did not provide new delivery guidance and highlighted potential challenges from tariffs, the Inflation Reduction Act (IRA), and other economic pressures. These factors contribute to a cautious outlook for the second half of the year, with concerns about the core business’s deterioration and the delayed scaling of new initiatives like Robotaxi and Optimus.
Additionally, while Tesla’s automotive gross margins exceeded expectations, driven by favorable pricing, there are uncertainties about the sustainability of these prices. The CFO’s warning of headwinds in the second half, coupled with potential reductions in regulatory credits and the impact of tariffs on energy generation margins, further supports the Sell rating. The anticipated end of IRA credits poses a risk to U.S. auto demand, and the affordable Model Y is not expected to significantly offset this decline. Overall, these challenges suggest a rough road ahead for Tesla, justifying the Sell recommendation.
Langan covers the Consumer Cyclical sector, focusing on stocks such as Tesla, BorgWarner, and Autoliv. According to TipRanks, Langan has an average return of -6.2% and a 47.75% success rate on recommended stocks.
In another report released today, UBS also maintained a Sell rating on the stock with a $215.00 price target.