Tesla (TSLA) stock was down more than 1% in Monday’s pre-market trading after Morgan Stanley analyst Andrew Percoco downgraded his rating for the electric vehicle (EV) maker to Hold from Buy, citing valuation concerns. The analyst increased his price target to $425 from $410. The revised price target indicates a 6% downside risk.
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Morgan Stanley Analyst Moves to the Sidelines on TSLA Stock
Percoco called Tesla “a clear global leader” in EVs, manufacturing, renewable energy, and real-world AI and agreed that it warrants a premium valuation. That said, he noted that TSLA stock is trading closer to its fair valuation.
The 5-star analyst expects TSLA shares to be “choppy” over the next 12 months. The analyst added that while Tesla is more than an automaker, he sees downside to his estimates, with the optimism about the non-auto businesses already priced into the stock.
With TSLA stock trading at 30x Percoco’s EBITDA (earnings before interest, taxes, depreciation, and amortization) estimate for 2030, the analyst prefers to wait for a better entry point. Notably, Morgan Stanley’s 2026 auto volume projection for Tesla is now 13% below the consensus estimate due to a more cautious EV industry outlook.
Is TSLA Stock a Buy, Sell, or Hold?
Amid intense competition in the EV space, Wall Street has a Hold consensus rating on Tesla stock based on 12 Buys, 12 Holds, and 10 Sell recommendations. The average TSLA stock price target of $383.54 indicates 16% downside risk.
