In a report published Wednesday, UBS (UBS) Analyst Colin Langan suggests buying Tesla Motors (TSLA) stock at current levels is something of a crapshoot.
While praising Tesla’s disruptive model, Langan, who started the name at a ‘Neutral’ rating with a $230 price target, warns that most of the ticker’s upside is already factored in.
“[I]nvestors should appreciate that the downside this early in its life is material,” Langan writes. “The failure of a current or future product could quickly unravel all the progress,” and even though Tesla is building a lead in its field, continued success will draw competitive threats.
The analyst also said that Tesla’s stock has rallied significantly in recent months, catapulting up 1,195 percent since the IPO price of $17 in June 2010.
“While the rally has been driven by a series of positive news flow, at this point, we see risk-reward as slightly skewed towards the downside”, Langan writes, adding that UBS “does not see a near-term catalyst that could drive the stock further, as the launch of the Model X is not until spring 2015, the launch of the Gen III mass-market vehicle is at least three years away, it is too early to add a new plant, and management has already guided to a production level of 0.5m vehicles by 2020.” [via StreetInsider].
Tesla shares are down around $4 today, trading at $216 and change as of 12:14PM EDT.