Nasdaq TSLA Tesla

Tesla has backed down to US regulators and will recall 134,941 Tesla Model S sedans and Model X SUVs due to a safety issue with their large center touchscreen.

The electric vehicle maker agreed to perform a recall even though it did not conclude that a defect exists, the company said. Specifically, Tesla (TSLA) will recall certain 2012-2018 Tesla Model S and 2016-2018 Model X vehicles with a center display equipped with a NVIDIA Tegra 3 processor. As part of the recall action, which is expected to begin March 30, the EV maker will need to contact owners of cars with a potential safety-related defect and conduct a remedy repair, free of charge.  

“When the 8GB eMMC NAND flash memory device for the center display reaches lifetime wear, the eMMC controller will no longer be able to maintain the integrity of the filesystem, causing a failure in some of the center display functions,” according to a letter by the US National Highway Traffic Safety Administration (NHTSA). “The wear-out condition can cause the loss of the rearview camera display, defrost/defog control settings, and exterior turn signal lighting, reducing visibility and increasing the risk of a crash.”

The NHTSA initiated an investigation last year following complaints about failures of the media-control unit that cause loss of touchscreen features.

Tesla shares have popped 101% over the past three months and exploded 392% over the past year as demand for EVs is on the rise and the stock was included in the benchmark S&P 500 Index. (See TESLA stock analysis on TipRanks)

Following the steep share rally, RBC analyst Joseph Spak now argues that the stock could be up for a cooling-off period, after TSLA reported Q4 Non-GAAP EPS of $0.80, falling short of consensus estimates by $0.25.

“Given the run in the name, an earnings ‘miss,’ no specific 2021 guidance and potential supply constraints, we could see the stock take a breather,” Spak wrote in a note to investors. “But, to long-term believers, there is likely little to deter their thinking.”

The analyst stuck to his Hold rating on the stock but raised his price target to $725 from $700, which implies that shares are projected to pull back 17% over the coming year.

In line with Spak’s outlook, the rest of Wall Street analysts are mostly sidelined on the stock. The Hold consensus rating shows 15 Holds, 5 Sells and 7 Buys. That’s with an average analyst price target of $ 625.04, implying 28% downside potential lies ahead over the coming 12 months.

Meanwhile, on TipRanks' Smart Score system, TSLA scores an 8 out of 10, suggesting that the stock has strong potential to outperform market expectations.

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