Tesla's (TSLA) Game of Distracting Investors from Poor Results Won't Last, BofA/Merrill Lynch Says; PT Cut to 70% Downside

Bearish Tesla Motors (NASDAQ: TSLA) analyst John Lovallo of BofA/Merrill Lynch just got even more bearish. Today the analyst cut his price target on the EV maker to $65.00 (from $70.00), suggesting 70% downside to Friday's close. He maintained his Underperform rating.

Lovallo said Tesla's long term targets have offset a steady stream of negative news and weak financial results. However, the analyst expects this strategy to lose its luster, especially amid a long road of challenging financial results and cash burn.

The analyst said, "notably, Tesla now believes its 2015 financial results will be significantly worse than Street expectations, which were already meaningfully tempered following a sobering 4Q14."

In its latest move to distract investors from disappointing financial results, Lovallo notes the company announced an upcoming
unveiling of its stationary storage product. "In our view, a potential market for residential stationary storage is even further down the road than Tesla’s 2020 target for profitability," he said.

Further, the analyst noted that the company appears to be pulling back production, which he said creates the appearance of rising demand.

As a result the firm once again cut numbers: 2015 EPS goes from $1.56 to $0.95, FY 2016 EPS goes from $2.10 to $1.50, and FY 2017 goes from $2.60 to $2.40.

For an analyst ratings summary and ratings history on Tesla Motors click here. For more ratings news on Tesla Motors click here.

Shares of Tesla Motors closed at $217.11 yesterday.

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