Cowen Initiates Tesla At Underperform, Implies 21% Downside

Cowen’s Jeffrey Osborne believes that while Tesla Motors Inc TSLA appears well positioned fundamentally for the long term, there a significant execution risks over the next 12 to 18 months.

Osborne initiated coverage of the company with an Underperform rating and price target of $160.

Risks

“The SolarCity Corp SCTY acquisition only adds an additional layer of complexity at a crucial time when the company should be focused on the Gigafactory ramp and Model 3 launch,” the analyst mentioned.

On the other hand, Osborne also pointed out that Tesla Motors has a meaningful lead over the competition, with its “aesthetically pleasing” and high performance all-electric vehicles. However, the company’s new initiatives in the trucking and bus markets could be a cause for concern, given the longer sales cycles, lower volumes and high R&D needs.

In addition, the SolarCity acquisition was likely to take time and “soak up badly needed cash.”

The analyst believes that what Tesla Motors needs right now is for a lot of things to go right so that it can successfully transition into a sustainable energy company.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!