In This Article:
Tesla Inc (NASDAQ: TSLA) CEO Elon Musk made his intentions clear he wants to take his company private at $420 per share. JPMorgan analysts cast some doubt on the latest developments, which reinforces a bearish stance on the stock.
The Analyst
JPMorgan analysts led by Ryan Brinkman maintain an Underweight rating on Tesla's stock with a Dec. 2018 price target lowered from $308 to $195.
The Thesis
Musk's Aug. 7 Tweet gave the impression an entity had "firmly decided" to fund a transaction to take Tesla private and the board was at the very least informally supportive of a deal, Brinkman said in a note. However, the CEO's follow-up comments on Aug. 13 implies any deal is in reality "potentially far from being formally proposed."
Given the inconsistency in comments from Tesla, JPMorgan said it's appropriate to take a different approach in valuing the stock and remove a 50 percent weighting that was previously assigned to a going private transaction at $420 per share. The firm's revised $195 price target is based on a pure fundamental basis, which factors in a blend of P/E, EV/EBITDA, and Price-to-Sales multiples.
The price target could move up or down based on new developments which impact the likelihood of a transaction occurring or not, the analysts said.
Price Action
Shares of Tesla fell as much as 7 percent in Monday's pre-market session. At time of publication, the stock was down about 2.6 percent at $297.63 per share.
Related Links:
Tesla CEO Elon Musk: 'From A Personal Pain Standpoint, The Worst Is Yet To Come'
These Analysts Love Tesla's Potential, But Balk At Its Valuation
Latest Ratings for TSLA
| Aug 2018 | JP Morgan | Maintains | Underweight | Underweight |
| Aug 2018 | Goldman Sachs | Suspends | Sell | Not Rated |
| Aug 2018 | Jefferies | Maintains | Hold | Hold |
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