Avoid or short Tesla, First Solar and others, Wolfe Research says

Wolfe Research has a list of stocks that are big targets for short sellers — and it includes some of the market’s most well-known names. The firm compiled a basket of stocks that appear most frequently on 16 different screens for short-sale candidates. Short sales involve borrowing shares of a target stock, selling them on the open market and counting on the price to fall when it comes time to repay, pocketing the difference. Wolfe’s short screens look at factors including valuation, earnings quality, capital allocation and sentiment to find stocks that are most at risk. Here are 10 that showed up most commonly on Wolfe’s screens: Tesla , the leading domestic maker of electric vehicles, was one of the best-known stocks on the list. The retailer investor favorite showed up on six of Wolfe’s 16 screens. After doubling in 2023, Tesla has dropped more than 29% this year. Now the average analyst sees Elon Musk’s company rising less than 3% over the next year, according to LSEG. The typical analyst has a hold rating. TSLA YTD mountain Tesla, year to date First Solar also made the Wolfe list of possible short targets, with appearances on five screens, up from three screens the month before. Unlike Tesla, the solar stock has soared more than 60% this year. But after that big run-up, the average analyst surveyed by LSEG forecasts First Solar shares will fall more than 6% over the next year. at the same time as the typical analyst carries a buy rating. One of those bullish analysts is Morgan Stanley’s Andrew Percoco, who hiked his price target 33% to $331 from $248 this week. That implies upside of more than 24% from Tuesday’s close. Percoco cited artificial intelligence demand and policy support as reasons for optimism. “Within our clean tech coverage, FSLR is the biggest beneficiary of recent trade policy changes on clean energy imports,” Morgan Stanley wrote to clients. Rideshare platform Lyft popped up on four of Wolfe’s short screens, down from six the month before. The stock has added just over 3% this year, building on 2023’s 36% rise. Despite most analysts carrying a hold rating, the average analyst sees Lyft shares jumping more than 20% over the next year, according to LSEG.