UBS analysts downgraded Tesla (NASDAQ:TSLA) shares to Neutral from Buy with the price target of $270 per share (up from the prior $220).
Tesla shares are down 1.7% in pre-market Monday.
The analysts see Tesla shares as fully priced at these levels, reflecting the management’s strong execution. Tesla stock is up over 110% year-to-date.
“We think the recent strong share performance fully reflects the strong demand response seen after the price cuts, as well as a solid execution in 2024,” the analysts said in a client note.
“Going forward, upside risk to consensus seems very limited because strong execution is already fully reflected. Also, (1) deliveries are guided down q/q for Q3 on temporary production halts; (2) opex is on the rise due to Cybertruck, Dojo and other projects; (3) any stepchange in margins will depend predominantly on progress made on the autonomy front, and it would seem overly optimistic to anticipate this for the next 12 months.”
Despite the downgrade call, which is mostly fueled by rich valuation, the analysts continue to see Tesla as a global electric vehicle (EV) leader. Still, risk/reward “looks balanced” over the next 12 months, they said.