BofA/Merrill analyst John Murphy sees material risk to Tesla's long-term viability due to the SolarCity acquisition, and notes the recent capital raise increases potential shareholder dilution. Murphy said Tesla still has a very serious cash burn issue and lowered estimates to reflect SolarCity and the recent $1.2B capital raise. His 2017 earnings estimate goes to a loss of $2.00 from a loss of 25c and 2018 moves down to $1.65 from $2.05. Murphy lowered his price target on Tesla to $165 from $170 and reiterated his Underperform rating.

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Wedbush analyst Daniel Ives says "the moment of truth has now arrived" for Elon Musk and Tesla with next week's earnings call "one of the most important moments in the company's history." For the first time, "many long time Tesla believers are giving up on the story and throwing in the white towel," the analyst tells investors in a research note. The firm says the miscalculation of demand erosion in China has "been a gut punch to the bull thesis," while the Model 2 versus Robotaxi debate "has taken on a life of its own." Wedbush notes that while it and the Street are expecting a "rip the band-aid off quarter and a softer outlook," Musk needs to do five things on the conference call to start to change the narrative in the Tesla story: Reverse the negative growth trend in China, give realistic guidance for the Street for 2024, come out with the Model 2 in the next 12 to 18 months, address artificial intelligence initiatives at Tesla and the 25% ownership comment from a few months ago, and announce an AI day. "The clock has struck midnight for Musk to lay out the strategic plan for the future," contends the analyst, who keeps an Overweight rating on Tesla with a $300 price target.

Get caught up quickly on the top news and calls moving stocks with these five Top Five lists. 1... To see the rest of the story go to thefly.com. See Story Here

Get caught up quickly on the top news and calls moving stocks with these five Top Five lists. 1... To see the rest of the story go to thefly.com. See Story Here

Deutsche Bank analyst Emmanuel Rosner downgraded Tesla to Hold from Buy with a price target of $123, down from $189. The analyst cites the "high likelihood" of Model 2 push-out and the company's change of strategic priority to Robotaxi for the downgrade. Deutsche's Buy rating was predicated on Tesla's next-generation vehicle priced at $25,000 coming late next year, which would allow the company to reaccelerate volume, margins and free cash flow, and potentially come to dominate the Western electric vehicle market, the analyst tells investors in a research note. However, pushing out the Model 2 will create "significant" earnings and free cash flow pressure on 2026 and beyond estimates, and make the future of the company tied to Tesla "cracking the code on full driverless autonomy," which represents a "significant technological, regulatory and operational challenge," says Deutsche Bank. The firm views Tesla's shift to Robotaxi as "thesis-changing," and worries the stock will need to undergo a "potentially painful transition in ownership base," with investors previously focused on electric vehicle volumes and cost advantages potentially "throwing in the towel, and eventually replaced by AI/tech investors with considerably longer time horizon."