Bank of America analyst John Murphy has downgraded Tesla Inc. (TSLA, Financial) from a “Buy” to a “Neutral” rating, citing increased execution risks for the electric vehicle giant in 2025. However, Murphy raised his price target for Tesla shares to $490, up from $400, signalling optimism despite his more cautious outlook.
The run for Tesla stock has been extraordinary since the November 2024 U.S. presidential elections when Donald Trump won. After the election, shares of TSLA rocketed up 60% by year's end on a tailwind of a favourable economic environment and stock market enthusiasm for the carmaker's future. Tesla delivered strong market sentiment on Q4 and full-year 2024 vehicle deliveries, but the company's deliveries fell short of expectations as sales declined year over year.
The upside was that Tesla Energy had a breakout year: 11 GWh of energy storage went online in Q4 and 31.4 GWh for the whole year. The energy storage division is still growing strongly for Tesla, outputting a bit of a bright spot in softer car sales.
Murphy also highlighted several big catalysts for Tesla in the future: a cheap, low-cost car, the launch of Robotaxi, and scaling up Megapack manufacturing. However, the analyst cautioned that there are execution risks related to these new initiatives. Consequently, though a price target based on some upside potential, money is a “Neutral” call, as one would expect in such a case, considering the great potential and tolls.
Despite other analysts' optimism, some are adjusting their price targets upward while caution remains as to whether Tesla will be able to satisfy its lofty goals for 2025.
