12:06 PM EDT, 04/04/2024 (MT Newswires) -- Tesla's (TSLA) deliveries are likely to bottom by Q2 following a weak Q1 and before a "major rejuvenation of the model cycle," Morgan Stanley said Thursday in a report.

"Tesla's weak Q1 update is a clear sign of the ongoing EV 'shake-out' phase," Morgan Stanley said. The company reported 386,810 vehicle deliveries in Q1, trailing the Visible Alpha consensus estimate of 454,200.

Morgan Stanley lowered its full-year forecast for the company's deliveries to 1.75 million from 1.95 million. The investment firm also cut long-term delivery projections through 2030.

Morgan Stanley also reduced its estimates for Tesla's 2024 operating margin, free cash flow and non-GAAP earnings per share.

The firm maintained its overweight rating on Tesla, partly because of its position as an artificial-intelligence beneficiary. The price target on stock was cut to $310 from $320.

Shares of Tesla rose 3.8% in recent trading Thursday.

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