There's hardly a better way for an analyst to signal his or her bearishness on a stock than to cut their price target more than once. This happened recently with the beleaguered electric vehicle (EV) pace-setter Tesla (TSLA +3.14%).
In mid-April, a prognosticator from a major U.S. bank got out his scissors for the second time in less than one month. Uncomfortably, this occurred barely over one week out from the company's scheduled first-quarter earnings release.
A double cut for Tesla
That analyst was Colin Langan from the investment wing of one of the "top four" lenders, Wells Fargo. Langan recently made another downward adjustment to his Tesla price target; it's now $120 per share, down from the preceding $125 per share. That, in turn, was lowered drastically by Langan from $200 in mid-March when he downgraded his recommendation to underweight (read: sell) from equal weight (hold).
At the new $120 price target, it nearly goes without saying, Tesla still rates an underweight in the analyst's view. The target implies a nearly 26% downside from the current price over the next 12 months.
"While we expect a first-quarter miss, expectations are low after weak deliveries," Langan wrote in his latest note on the EV company. Referring to Tesla's much-hyped -- yet inaccurately named -- Full Self Driving (FSD) assistance system, the pundit added that the company's "poor fundamentals may be overshadowed on the first quarter call by FSD 'razzle-dazzle.' "
NASDAQ: TSLA
Key Data Points
The bears are scratching at the door
This is one of several bearish pundits' takes on Tesla in the run-up to those quarterly results. As the Wells Fargo analyst points out, many do not anticipate great things from the company's report.
Even given that, EV sales growth is lackluster and Tesla seems far from done with its lengthening streak of price reductions to key models. This feels like a period of adjustment for Tesla, and one that will produce some pain for the company and its investors. A stock sell-off might just be in order for holders of the stock.
