J.P. Morgan ends bearish Tesla call that was predicting a 65% stock drop

MW J.P. Morgan ends bearish Tesla call that was predicting a 65% stock drop

By Emily Bary

A new analyst has taken over the bank's Tesla coverage, and he has a less gloomy view of Elon Musk's EV company

Tesla's valuation is "clearly lofty," but the company has underappreciated advantages, according to J.P. Morgan.

There's now one fewer Tesla bear on Wall Street as J.P. Morgan makes some changes to how it handles coverage of the electric-vehicle maker.

J.P. Morgan analyst Rajat Gupta just took over the investment bank's coverage of Tesla's stock $(TSLA)$, and in doing so, he lifted the firm's rating to neutral from underweight. The previous analyst, Ryan Brinkman, was a fairly vocal Tesla bear who warned just two months ago that investors should treat the stock with a "high degree of caution."

Brinkman's previous price target of $145 implied 65% downside from Thursday's closing price of $418.45. But Gupta has now raised J.P. Morgan's Tesla target to $475 in conjunction with the upgrade.

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Gupta praised Tesla's "unique advantage" that is "unmatchedat an industrial-level scale." He was referring to the degree to which Tesla vertically integrates its software and hardware offerings while moving swiftly on technological developments.

"We believe this aspect, while largely known at a high level, is still somewhat under-appreciated and misunderstood, for the sheer starting-point advantage it brings," he wrote on Friday.

Tesla shares trade at 195 times estimated adjusted earnings per share for fiscal 2027, a valuation that's "clearly lofty," in Gupta's view. But his new target price starts to value Tesla on earnings potential in 2030 and beyond, which is when he thinks revenue and margin performance will inflect higher following the current period of hefty spending.

See also: Here's how SpaceX is pitching its IPO to everyday investors

So why not turn bullish now? Gupta advises that investors stay patient, as better buying opportunities could be on the horizon later. He cited "potential near-term risk to [Tesla's] valuation from index diversification to the more near-term growthier/shinier stories, which could provide a better entry-point for investors to reengage or add" once valuation levels come down.

"Fundamentally, we believe the direction of shares in the near-term is likely to be tied to incremental data points/progress related to robotaxi and Optimus, along with improving visibility on forward earnings reset and eventual revenue/margin inflection," he added.

Tesla shares were down about 1% shortly after the market open on Friday.

-Emily Bary

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June 05, 2026 09:50 ET (13:50 GMT)

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