Evercore ISI downgraded Tesla to underperform from in-line Monday. They also cut the 12 month price target from $330 per share to $240 per share. Analyst, Arndt Ellinghorst cited increased competition as well as reduced tax credits to customers for the downgrade.According to Ellinghorst, “The change in recommendation and lower price target are driven by a more cautious view on demand across all models, but in particular the recent severe decline in demand for Model S/X,” Ellinghorst also stated, “There is increased uncertainty around near-term demand vs previous bullish forecasts and growth cannot stall for a growth company.”
“The market used to be concerned about production, we’re now concerned about demand,” The analyst stated. “Without properly refreshing the models, the growth story for Model S/X appears to be over.”
Shares of the company have fallen 25% since the highest trading price this year in January. Tesla bulls are looking toward the completion of the construction of the companies Gigafactory 3 in Shanghai. The Chinese market may be the most important for the future. Tesla will look to take advantage of local manufacturing to give it a competitive advantage there.