S&P Capital Is Selling Tesla, Sets $155 Target

S&P Global Market Intelligence downgraded electric car maker Tesla Motors Inc TSLA to Sell from Hold, and set a price target of $155. Barron's highlighted the downgrade in a mid-day blog post Wednesday.

"The shares have rallied sharply recently in anticipation of the Model 3 reveal later this month and amid bullish comments from some equity analysts. While we expect sales and EPS to surge in '16, we see significant execution and valuation risk in the premium priced stock," analyst Efraim Levy wrote in a note.

Levy said Tesla should be evaluated as a growth company, rather than a typical automobile manufacturer, because of the rapid expansion in sales and profits that he projects over the next few years. However, the analyst said his enthusiasm is tempered by recent operating shortfalls.

"Our target ($155) equates to a multiple of 111X our '16 EPS projection of $1.40, and 43X our 2017 EPS estimate of $3.60, reflecting our expectation for rapid automotive profit growth through '17, from '14's base, but we note risks," Levy added.

Shares of Tesla sold off on Wednesday, but were up 1.42 percent at $225.75 Thursday morning. The stock has dropped 6 percent year-to-date and underperformed the benchmark S&P 500 (down 1.72 percent).