Earnings Estimates for TSLA Could Tumble, Bank Warns

Analysts' medium-term profit estimates for Tesla (TSLA) could sink by 50%, BNP Paribas, a French bank, warned today.

The bank cut its price target on TSLA to $137 from $150 and kept an Underperform rating on the name. The bank's new price target is 44% below the current price of TSLA stock.

Why the Bank Has Become More Bearish on TSLA

Worries about Tesla's outlook in China could be among the issues that prompt analysts to slash their medium-term estimates for Elon Musk's automaker, according to BNP Paribas.

The French bank noted that Tesla's free cash flow is expected to enter negative territory, while its revenue growth over the past 12 months dropped to just 1%. The automaker may have difficulties financing its AI initiatives, given its declining profitability, BNP Paribas suggested.

Finally, the bank pointed out that the price-earnings ratio of TSLA stock is a huge 111 times.

The Recent Performance of TSLA Stock

In the last month, the shares have advanced 3.6%, but they have tumbled 43% in the last three months.

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Disclosure: None. This article is originally published at Insider Monkey.