Zacks Investment Research downgraded shares of Tesla Motors, Inc. (TSLA) from OUTPERFORM to UNDERPERFORM on July 02, 2014, with a target price of $218.00.
We are downgrading Tesla to Underperform from Outperform based on the company's continuous losses, high research and development (R&D) and selling, general and administrative (SG&A) expenses, and production constraints such as shortage of battery supply. Tesla is also facing opposition to its direct-selling model in some U.S. states, which might lower sales volumes. Moreover, limited demand for electric cars and high prices are resulting in low market penetration for Tesla. The "B-" credit rating from S&P is also a headwind. Tesla reported adjusted loss of $0.14 per share in the first quarter of 2014, deteriorating from break-even results recorded in the year-ago quarter. The loss was wider than the Zacks Consensus Estimate of a loss of $0.10.
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