Tesla stock will fall another 33% because it's still expensive and lacks upside catalysts, Bernstein says

• Bernstein has cut its stock-price target on Tesla to $120, down from $150.
• That implies 33% downside from where the stock is trading on Wednesday.
• The firm says Tesla is trading too expensive relative to automaker peers, and also has minimal upside catalysts in sight.

Little can justify Tesla's high stock price, as its margins are on par with lower-valued competing automakers, Bernstein wrote on Tuesday. 

What's more, the electric vehicle firm offers no obvious catalysts to spark growth down the road, analysts said, cutting their price target on Tesla to $120 a share, from $150. That implies a 33% drop from where the stock traded on Wednesday.

"Tesla's stock price remains high on almost every valuation metric compared to both traditional and higher-growth auto OEMs, and also looks expensive relative to its reduced growth expectations when measured against tech comps," analysts led by Toni Sacconaghi wrote. 

Already, the EV-maker has slumped aggressively year-to-date, with missed fourth-quarter earnings spurring on the rout. The stock has shed around 30% since the year's start.

But despite its underperformance, Tesla still holds a massive premium against other auto firms, with a valuation that is six-fold higher than other manufacturers. That's because Tesla historically held a much higher growth rate, but that's less the case today, Bernstein said: 

"That said, today Tesla's margins are in line with or U.S. in some cases lower than US, Japanese and US OEMs, and its forward growth rate is more comparable to Toyota and Honda, and lower than that of BYD," Sacconaghi wrote.

And while Tesla commands premium multiples above large-cap tech firms, it's margins are significantly lower among this cohort as well, Bernstein added.

According to the note, softer demand is chipping away at Tesla's production volumes, as EV adoption decelerates in Europe and the US, while the launch of the Highland model in China failed to showcase a "step-change" in demand.

Bernstein lowered its production forecast to 1.98 million for the year, against consensus of 2.06 million. Tepid growth will continue into 2025. However, Tesla is still forecast to become the highest world's volume auto maker.

Bullish investors may point to Tesla's full self-driving technology as a transformative venture that should justify its stock price overtime, but Bernstein notes that other manufacturers are also competing in this space. 

It's also unlikely that Tesla makes ground as a robotaxi service, as Waymo already dominates the field. 

Others have also pointed out Tesla's venture into robotics and AI, including the Optimus and Dojo announcements. But as with self-driving, the firm is already behind, with CEO Elon Musk downplaying Dojo as a "long shot," Bernstein cited.