UBS Calls Tesla (TSLA) Overvalued Ahead of Q2 Earnings, Maintains $215 Price Target
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UBS expects Tesla's earnings per share to come in at $0.43. Auto gross margins, excluding regulatory credits, are forecast at 14% versus the Street's 13.5% consensus. The firm acknowledged that margins may surprise on the upside following Tesla's delivery beat, but underlying valuation concerns persist. Tesla closed Monday at just under $317, up 1%, but shares remain down over 21% year-to-date.
UBS Sees Regulatory Uncertainty
A key issue for UBS is the loss of high-margin regulatory credit revenue. The firm warned of risks tied to the removal of EV tax credits and flagged regulatory uncertainty for both Tesla and Rivian (RIVN). Additionally, UBS cited demand pressures, possible estimate downgrades, and concerns about CEO Elon Musk's focus following the recent robotaxi event.
While Tesla's momentum is partly fueled by its narrative, UBS noted the stock's valuation has already re-rated by roughly 20% since March, and core business challenges remain. Updates on the long-delayed affordable model and commentary around U.S. policy changes could move the stock in the short term.
Research company Visible Alpha's data shows sentiment split, with eight 'Buy,' five 'Hold,' and four 'Sell' ratings. UBS stands among the more skeptical voices, expecting the conference call to focus less on current car demand and more on forward-looking projects like robotaxis and the Optimus robot.
Is Tesla a Buy, Sell, or Hold?
On the Street, Tesla currently boasts a Hold consensus rating from Wall Street analysts based on 35 reviews. The average price target stands at $293.38, suggesting a potential downside of 7.42%.
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