UBS stuck with its negative assessment on Tesla (TSLA, Financials) and kept its “Sell” rating and $215 price target ahead of the company’s second-quarter earnings report on July 23. The company said that even while high deliveries and favorable currency movements should help Tesla in the short term, it is still “fundamentally overvalued.”UBS predicts that earnings per share will be $0.43 and that car gross margins, not including regulatory credits, would be 14%, which is higher than the 13.5% Street estimate. Analysts, on the other hand, said that the company’s earnings quality was at danger because of lower high-margin regulatory credits and more policy uncertainty.The report also brought up worries about CEO Elon Musk’s focus, saying that he has been focusing on long-term projects like robotaxis and AI instead of Tesla’s main business. UBS suggested that the Q2 conference call might focus more on these future plans than on current patterns in vehicle demand.Tesla’s stock finished Monday slightly under $317, up 1% from the previous day, but it is still down more than 21% since the beginning of the year. The average price target of $293.38 and the “Hold” consensus among analysts suggest that opinions are split. This means that the stock might go down by 7.4% from where it is now.
This article first appeared on GuruFocus.