Jefferies Downgrades Tesla, Says EV Maker Faces “Execution Risk” in 2021



Jefferies has downgraded Tesla Inc (NASDAQ: TSLA), citing “execution risk” the automaker faces in 2021 amid product launches and an expansion drive, CNBC reported Thursday.

The Tesla Analyst: Jefferies analyst Philippe Houchois downgraded Tesla stock from Buy to Hold but raised its 12-month price target from $500 to $650.

The Tesla Thesis: Houchois noted that the Elon Musk-led automaker may face some “execution risk” as the company expands in batteries and other segments.

“We see 2021 as a year when Tesla’s growth and earnings will accelerate with the roll out of 2 vehicles with high commonality but also an acceleration of investment in both capacity and batteries that add some degree of execution risk,” wrote Houchois.

The analyst noted that Tesla enjoys a “messianic” brand that has a reach beyond autos and this gives it a competitive edge. Nevertheless, he issued a caveat: “We don’t believe that Tesla can dominate the industry given the latter’s size, structure and politics.”

Jefferies downgrade comes at a time when Tesla’s stock has soared nearly 650% on a year-to-date basis. The company is due to be included in the S&P 500 index this month.

“Tesla in a league of its own,” Houchois explained, as per CNBC. “A lot happened in 2020 with next year a mix of delivery and high re-investment. Tesla remains self-funded but raising capital keeps pressure on Legacies.”