Tesla Downgraded At Pacific Crest On Valuation, Second Half Bar 'Looks High'

In a report published Wednesday, Pacific Crest analyst Brad Erickson downgraded the rating on

to Sector Weight, citing its fair value at $293. Analyst Brad Erickson wrote, "From root-level technology and manufacturing all the way to sales and marketing, distribution and executive management, Tesla's differentiation relative to its peer group is nothing short of total." Erickson pointed out, however, that Tesla's current share price already "fully reflects these core attributes." Although there is some upside potential, the recent share price appreciation "has created a more balanced risk/reward profile." In the report Pacific Crest noted that sentiment had "reversed dramatically since six months ago" and that the 2H bar appeared high. "Now there is less concern about low oil prices, less fear about competition, less skepticism around opportunities in China and less worry about demand. We also believe optimism around Model X has risen meaningfully heading into a likely September launch." The EPS estimates for 2015 and 2016 have been reduced from $0.71 to $(0.03) and from $5.27 to $3.42, respectively, to reflect lower expectations of "accrued leasing revenue partially offset by higher battery revenue." "Key upside drivers largely surround the ability to add incremental production capacity. Anything short of what is a high 2H15 bar could create meaningful downside," Erickson added.