Did Analysts Just Get Too Bullish on Tesla?

To say that Tesla Motors Inc. (NASDAQ: TSLA) failed to generate more enthusiasm for the stock after its fourth-quarter earnings report would be incorrect, unless you measure to the end of the week. Shares jumped about 5.8% Thursday morning to open at $152.00, but closed Friday nearly a dollar lower than that. Shares had been sliding well before Tesla reported results, however.

It could be that Tesla is the poster child for a momentum stock: plenty of promise, decent actual performance and sky-high multiples. The big question of course is what is real and what is not. On Monday, Liam Denning at Bloomberg had this to say about Tesla after Morgan Stanley’s analyst cut his price target on Tesla by a third:

If you want a good definition of froth, a price target jumping by two-thirds largely due to expectations around businesses that either barely exist or don’t at all, and then being cut by almost 30 percent all in the space of less than six months is a pretty good candidate. Even now, a quarter of Morgan Stanley’s new target for Tesla relates to upside in the storage business and launching a successful robo-vehicle venture.

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Analysts differ on the stock’s prospects, but all agree that prior price targets needed to be adjusted downward. Here are some recent analyst announcements.

• Barclays maintained its Underweight rating and cut the price target from $180 to $165.
• Baird cut its price target from $282 to $230 and has a Neutral rating on the stock.
• Bank of America Merrill Lynch reiterated its Underperform rating with a $144 price target.
• Credit Suisse rates the stock Outperform but cut its price target from $325 to $240.
• Goldman Sachs cut its price target from $235 to $202 and rates the stock Neutral.
• JPMorgan has an Underweight rating and cut its price target from $180 to $155.
• RBC cut its price target from $240 to $180 and has a Sector Perform rating on the stock.
• UBS cut its price target from $160 to $140.

Tesla’s shares closed Friday up 0.4% at $151.04, in a 52-week range of $141.05 to $286.65. That low was posted Tuesday, the day before Tesla reported earnings. The consensus price target on the stock is $241.47 but likely does not yet include last week’s changes.