Analysts at Morgan Stanley believe Tesla Inc. (NASDAQ:TSLA) shares will be “extremely volatile” next year, with the electric vehicle firm’s stock likely to reach highs that could top US$400 before facing headwinds that could take them below current levels.
In a note to clients, the US bank’s analysts also slashed their forecasts for Model 3 production in the fourth quarter, saying they expect Tesla to deliver just 1,000 of the mass-market car, down from a previous expectations of 10,000 deliveries. They kept their 2018 forecast of 120,000 Model 3 deliveries unchanged.
Tesla chief executive, Elon Musk had predicted that Tesla would be able to make 5,000 Model 3 cars a week by the end of the year, but after third-quarter results earlier this month he warned that the company would likely only reach that milestone late in the first quarter.
The Morgan Stanley analysts predict two stages to Tesla stock’s run in 2018, one driven by an easing of production bottlenecks with strong cash flow, and the downturn then led by “mounting concerns” over whether the group can hold on to its “competitive moat” as more car producers move into the electric market.
Morgan Stanley retained a ‘neutral’ rating on the stock with a price target of US$379.
In pre-market trading, Tesla shares edged 0.1% higher to US$317.81.