UBS Analysts Say Tesla Stock Remains ‘Overvalued’ Ahead of Earnings Next Week

Tesla (TSLA) is slated to report second-quarter earnings after the market closes July 23, and bearish UBS analysts said Monday that the electric vehicle maker’s stock remains “fundamentally overvalued.”

“We see deteriorating fundamentals in the auto business, the removal of 100% margin credit revenue, likely negative revisions to estimates, and a CEO that [is] arguably distracted from the business (or at least may not be as focused on the company as investors would like),” the analysts wrote in a note previewing earnings across the auto industry.

With their “sell” rating and $215 price target, UBS analysts are more bearish than most of Wall Street. In contrast, the stock has eight “buy,” five “hold,” and four “sell” ratings among the brokers tracked by Visible Alpha, and an average consensus price target just shy of $300.

UBS Sees Tesla’s ‘Story’ Fueling Its Momentum

The UBS analysts said they expect Tesla’s second-quarter earnings to be in line with estimates after deliveries fell short. They said that while they have their concerns, they recognize that Tesla is “perhaps the ultimate story-narrative-momentum-meme stock.”

They said next week’s conference call will likely be minimally focused on demand for Tesla’s cars, with CEO Elon Musk more likely to focus on last month’s robotaxi launch and progress for its Optimus robot. For Tesla’s auto business, analysts expect updates on the more affordable Tesla model, which was originally scheduled to launch in the first half of the year, along with the company’s thoughts on the disappearance of EV tax credits and how this could impact Tesla’s margins.

Tesla shares added 1% Monday to close just under $317, but they are still down more than 20% since the start of this year.

This article has been updated since it was first published to reflect more recent share price values.