Tesla Permabull Adam Jonas Cuts Target To $450, Sees 'Gap' Between Targets And Reality

• Tesla Motors Inc TSLA shares are up 8percent year-to-date, after hitting a low of $191.87 in mid-January.
• Morgan Stanley’s Adam Jonas maintained an Overweight rating on the company, while reducing the price target from $465 to $450.
• The high sticker price of the company’s Model X makes 2016 volume targets difficult to achieve, Jonas pointed out.

Analyst Adam Jonas mentioned that Tesla’s recently launched Model X SUV is a “compelling demonstration” of the company’s engineering capabilities. The model has, however, been priced much higher than the company’s Model S and analyst expectations.

“Even allowing the Model X ATPs to decline over time through the introduction of lower-spec models leaves what we believe to be a higher- priced vehicle than we expected that may struggle to meet the volume expectations of the market and our forecasts,” Jonas noted.

The analyst believes that Tesla will not be able to deliver more than 20k units of Model X in 20016, unless it introduces significantly cheaper versions of the same in the near future.

The Model X unit volume forecasts for 2016 to 2018 have been reduced by between 5K and 10K units annually. Jonas expects these cuts to be partially offset by a higher estimate of the average transaction price of Model X.

The reduced unit volume forecasts for Model X and Model S, combined with a higher Model X average transaction price, is expected to result in a 2 percent reduction of the group non-GAAP revenues in 2016 and 2017, Jonas stated.

“Model X pricing reinforces our view that Tesla may need to explore new business models of mobility that address sustainable transport that more efficiently apply its EV technology in a connected and shared ecosystem,” the Morgan Stanley report stated.