Shares of Tesla Inc. (TSLA, Financial) declined by 1.8% in early trading on Tuesday following a downgrade from BofA Securities. Analyst John Murphy lowered his rating from 'Buy' to 'Hold,' citing high execution risks associated with Tesla's planned self-driving robotaxi service, expected to launch in late 2025. Despite the downgrade, Murphy raised the price target from $400 to $490, reflecting optimism about Tesla's longer-term potential.
Murphy highlighted concerns around Tesla's Full Self-Driving technology, noting that while the autonomous ride-hailing market holds significant promise, achieving fully autonomous driving capabilities involves substantial risks. The ambitious strategy, coupled with recent delivery trends, adds to the execution challenges.
This downgrade contrasts with recent upgrades by other analysts. On Monday, New Street Research analyst Pierre Ferragu upgraded Tesla to 'Buy' from 'Hold,' raising the price target to $460 from $240. Ferragu pointed to expected growth in Tesla's lower-cost models and advancements in AI-driven autonomous technology as key growth drivers.
The BofA downgrade comes just days after Tesla reported its first-ever annual drop in deliveries. The company reported 1.79 million deliveries for 2024, down from 1.81 million in 2023.
