Tesla will lose a third of its value after production falls short of Street expectations: Jefferies

Tesla's market-crushing performance this year will not last, according to one Wall Street firm.

Jefferies told its client to avoid the electric car maker's shares, saying the company's financial performance will be weak in the coming years.

"It is with a bit of a heavy heart that we initiate coverage of Tesla at underperform," analyst Philippe Houchois wrote in a note to clients Tuesday. "Achievements to-date and vision are impressive, but we don't think Tesla's vertically integrated business model can be scaled up as profitably and quickly as consensus thinks and valuation multiples imply."

The analyst set a 12-month price target for Tesla shares at $280, representing 27 percent downside from Monday's close.

The electric car maker's shares are outperforming the market this year. Its shares are up 80 percent year to date through Monday compared with the S&P 500's 12 percent return.

Tesla did not immediately respond to a request for comment. Its shares are down 1.4 percent in the Tuesday premarket session after the call.

— CNBC's Michael Bloom contributed to this story.

Let's block ads! (Why?)