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Thursday’s analyst calls: Downside risks for Tesla after earnings, Hertz gets downgraded

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(This is CNBC Pro’s live coverage of Thursday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) Analyst calls Thursday focused on Tesla and one of the EV maker’s customers, Hertz. Wall Street reacted to Tesla’s latest quarterly results as well as warning of slower growth for 2024. Shares were down 7% in the premarket, and several analysts lowered their price targets on the stock. JPMorgan, meanwhile, downgraded Hertz, citing headwinds from the company’s pullback in its initial EV push. Check out the latest calls and chatter below. All times ET. 5:58 a.m.: Wells Fargo downgrades DuPont Wells Fargo downgraded DuPont de Nemours to equal weight from overweight — citing a lack of catalysts in 2024 as weaknesses continue in China. The chemicals maker issued a net sales and adjusted earnings per share outlook for the first-quarter that came in under analysts’ expectations. Shares fell 14% Wednesday following the weak forward outlook. Analyst Michael Sison lowered his price target to $69 from $85, implying just 7.5% upside from Wednesday’s close. “We see ongoing destocking in DD’s industrial businesses and weakness in China as concerning,” Sison wrote in a Wednesday note. “While growth could turn the corner in 2H24, we believe the stock lacks a near-term catalyst to drive meaningful multiple expansion.” — Hakyung Kim 5:53 a.m.: Downside risks are ahead for Tesla, according to analysts Tesla’s fourth-quarter results has analysts thinking the stock might encounter some headwinds in 2024 after more than doubling in 2023. The electric vehicle maker missed on both earnings and revenue estimates, and said on an investor presentation that vehicle volume growth “may be notably lower” than the prior year, adding that the company is “currently between two major growth waves.” Morgan Stanley’s Adam Jonas noted that the company provided little-to-no details on demand visibility or confidence in its profit outlook. “Our team is left with the impression that either (a) visibility is poor, or (b) there are downside risks in the broader EV market outside of Tesla’s control,” Jonas wrote in a Thursday note. He noted in a Wednesday note that Tesla’s profitability will likely drop toward the $2 earnings per share range in 2024. Jonas has an overweight rating and $345 price target on shares, implying 66% upside potential. Other analysts are more bearish on the stock. UBS analyst Joseph Spak advised investors to “wait on the sidelines” until the growth outlook picks up again. He reiterated his neutral rating, and inched down his price target by $4 to $225, just 8% above Wednesday’s close. “We see little reason for investors to initiate new, or add to existing, positions. TSLA acknowledged slower growth, admitted cost reduction tougher, [and] we see continued evidence of slower EV adoption in US/Europe and high competition in China,” Spak said in a note on Thursday. Goldman Sachs also kept its neutral rating on shares with a price target of $220, or just 5.9% above Wednesday’s close. Although analyst Mark Delaney believes in Tesla’s longer-term growth potential, he cited slower growth in the near-to medium-term, and the likelihood of more cost reductions as overhangs on the stock. Barclays lowered its price target on shares by 10% to $225, while keeping its equal weight rating. “Not as bad as feared, but a cloudy path ahead reinforces some downside risk for now,” analyst Dan Levy wrote in a Thursday note. Levy believes the company’s fundamentals remain challenged and said margins look unclear. “Tesla’s vague volume outlook is a reminder that despite hopes of [a] volume ramp, it is nevertheless at the whim of a choppy macro / weak EV demand environment,” said Levy. 2024 may hold a “bumpy road ahead” for Tesla, per Wells Fargo analyst Colin Langan, forecasting margin erosion to continue. Langan has an equal weight rating on shares, and lowered his price target to $200 from $223. Toni Sacconaghi of Bernstein also reiterated his underperform rating and $150 prce target after the report. He noted: “While 2024 will be a challenging year, it is becoming increasingly apparent that 2025 will likely not be better, with continued pressure on growth and margins.” — Hakyung Kim 5:53 a.m.: JPMorgan downgrades Hertz Hertz’s electric vehicle push has dug a big hole for the company to climb out of, according to JPMorgan. The bank lowered its rating on the stock to neutral from overweight and lowered its price target to $11 from $17 per share. The new forecast still implies nearly 30% upside. “The company continues to work to extract itself from a failed electric vehicle strategy which has led to—we estimate—more than $0.5 bn of losses thus far stemming from the depreciating value of used EVs to higher collision repair costs and lower utilization resulting from a paucity of available spare parts to repair damaged Teslas,” analyst Ryan Brinkman wrote. Earlier this month, Hertz announced it is selling one-third of its electric-vehicle fleet amid low rental demand and high repair costs. “We believe the company remains inexpensive on normalized earnings but do not expect the firm to approach normalized earnings until sometime beyond 2025 and believe also that 2024 is likely to prove a transition year,” he added. Hertz’ shares fell more than 3% in the premarket. For the year, the stock is down more than 18%. HTZ 1D mountain HTZ falls — Fred Imbert

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