Tesla Motors Inc (TSLA.O) is just not feeling the love from Wall Street, with UBS on Tuesday becoming the third investment bank this month to downgrade the electric sports-car maker's stock.
Tesla's shares fell as much as 5 percent in early trading after UBS analyst Colin Langan cut his rating to "sell" from "neutral", saying he expects the company's car sales and home battery sales growth to disappoint.
Tesla unveiled Tesla Energy, batteries for use in homes and offices, on May 1 and is estimated to have got more than $800 million worth of orders in the first five days.
"However, this pace is misleading as customers did not put down deposits, so these are just solicitations of interest," said Langan, rated three stars out of five for his stock recommendations on Tesla, according to Thomson Reuters StarMine.
Tesla shares are pricing in deliveries of more than 1.5 million vehicles in 10 years and full utilization of Tesla Energy's capacity, said Langan. He says both scenarios are unlikely.
A UBS analysis indicates Tesla's planned 15 gigawatt of storage capacity may be larger than the market demand by 2020, Langan said.
Tesla's stock has risen 25 percent since the launch of Tesla Energy. On Monday, it hit $286.65, its highest this year.
Earlier this month, Deutsche Bank downgraded Tesla to "hold" from "buy," while Pacific Crest cut its rating to "sector weight" from "overweight." Both cited rich valuations for the downgrade.
The stock trades at a pricey 154.3 times forward earnings, higher than its median of 111, according to Thomson Reuters data.
Nearly 19 percent of Tesla's outstanding shares were sold short as of June 30, slightly lower than the 19.6 percent as of April 30, a day before the launch of the battery business.
Langan also slashed his 2015 and 2016 earnings estimate for the company, citing ballooning R&D and general operating costs due to investments in the Model 3 and the battery business.
Langan lowered his price target to $210 from $220.
Now, four analysts out of the 20 covering the stock rate it "sell", 10 rate it "buy" or higher and six rate it "hold". Their median price target is $309, implying a nearly 10 percent increase from the stock's Monday close of $282.26.
Tesla's shares were down 5 percent at $267.91 in morning trading on the Nasdaq, slightly higher than its session low of $267.51.