UBS analyst Colin Langan reiterated his Sell rating and $140 price target on Tesla Motors (NASDAQ: TSLA), saying the 60% surge in the stock since Q4 earnings is unsupported by fundamentals.

Langan believes the recent run up is largely due to the announcement of the company's ABL draw down. By drawing down the rest of their $1 billion ABL, TSLA has pushed out near-term liquidity concerns, he said. In addition, excitement leading into the Model 3 reveal and the recent recovery in gas prices have boosted investor sentiment around the stock.

"However, we believe the market should not ignore fundamental headwinds that persist with regards to TSLA's storage business, long-term profitability of the Model 3, and eventual need to raise cash," the analyst said.

On the Model 3, Langan views the upcoming reveal as a potential negative catalyst given high expectations and new competitors. Also, if the Model 3 is too exciting, it could negatively impact sales of the currently available and much more
expensive Model S. Furthermore, based on the firm's 2025 estimate of $155/kWh pack costs, Model 3 costs are still ~$7k more than an equivalent ICE vehicle.

"Our analysis also shows that the 10-year total cost of ownership of the Model 3 will be ~$21k more than the equivalent ICE vehicle," he added. "The Model X reveals also sets a cautious precedent considering TSLA traded down 14% one month after the reveal."

Commenting on cash needs, the firm forecasts Tesla to draw down the rest of their ABL by the end of this year. "TSLA's current market price implies ~1.5m deliveries and 18 GWh of storage sales in 2025, implying the need for at least two more production plants and another Gigafactory," he comments. "In total, we estimate over $5bn in additional capex through 2025 to meet Model 3 and storage sales expectations. In the near-term we expect capex to accelerate in the back half of this year and into 2017 as TSLA readies for the Model 3 launch."

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Shares of Tesla Motors closed at $230.26 yesterday.