Tesla investors have endured a brutal stretch thanks to, well, everything. Shares might be close to a bottom now. Even Tesla bears are getting more bullish.
In a Tuesday research note, Bernstein analyst Toni Sacconaghi called the risk/reward equation in Tesla (ticker: TSLA) stock more balanced at current levels. All analysts and investors, either explicitly or implicitly, go through risk-reward math in their heads to determine whether something is a good investment or to figure out how much investment capital to allocate to an idea.
For Tesla, the average analyst price target is currently at about $290 a share, according to FactSet, up roughly 60% from recent levels. In January, when shares were close to $400, the average analyst price target was about $326, implying a loss of roughly of almost 20% from those levels. The risk/reward equation looks far better now than it did then.
Tesla stock is down about 54% from January’s peak. Shares are off about 48% so far this year. Rising interest rates, inflation, parts shortages, production disruption, price cuts as well as CEO Elon Musk’s ownership and management of Twitter, have all sapped some investor enthusiasm for shares.
It’s been a lot for investors to handle. Despite the drop, Sacconaghi stopped short of upgrading the shares. He still rates Tesla stock Sell and has a $150 price target.
Another Sell rated analyst upgraded the stock recently though. This past Wednesday, Citi analyst Itay Michaeli upgraded Tesla stock to Hold from Sell. His target went to $176 a share from $141.33 with the upgrade.
In his report, Michaeli said something similar to Sacconaghi albeit using different words. He felt that some elevated expectations were no longer reflected in Tesla stock.
Despite the upgrade, Tesla shares have fallen 0.1%, while the S&P 500 and Dow Jones Industrial Average have fallen 0.1%.
Including premarket gains, shares are up about 9% since Michaeli’s upgrade. Analysts writing positively about Tesla stock, especially the more bearish ones, could be a sign that the bottom is in.