Bernstein on Monday raised its expectations for Tesla's share price, but still sees significant downside ahead. The firm upped its price target on Tesla to $450 from $300. The new projection is 44.4% lower than Tesla's closing price Friday. "One obvious justification for TSLA's valuation is its unique growth profile, which stands out, even among tech companies. In fact, based on comparables with other high priced, growth stocks, Tesla's valuation is arguably not unreasonable," Bernstein's Toni Sacconaghi said in a note. Bernstein kept an underperform rating on the stock. "While calling Tesla's stock direction near-term is a fool's game, we believe that longer term, valuation matters, and that risk/reward at current levels is not attractive," Sacconaghi said. The firm said that in the future, profit margins "will be a key factor determining the company's valuation." While Tesla bulls see the company's full self-driving capabilities as key to sustained high margins, Sacconaghi thinks "FSD pricing will ultimately be largely competed away over time." Tesla shares are down 23% in 2022. The stock was marginally higher in the premarket Monday. —CNBC's Michael Bloom contributed reporting.
A Tesla dealership in Colma, California, U.S., on Wednesday, Jan. 26, 2022.
David Paul Morris | Bloomberg | Getty Images
Bernstein on Monday raised its expectations for Tesla's share price, but still sees significant downside ahead.