(This story is for CNBC Pro subscribers only.) Bank of America downgraded Tesla on Wednesday after the electric car maker's recent rally pushed its valuation too high in the firm's eyes. The bank slashed its rating on Tesla to underperform from neutral, while lowering its 12-month price target to $485 from $500. The new target represents a near 30% decline from Tuesday's close of $686.72. Shares of Tesla have soared 31% this month alone, bringing its 2020 gains to more than 64%. The stock got a boost after the company reported earlier this month it delivered approximately 88,400 vehicles in the first quarter of 2020, beating expectations. "We are downgrading our rating on TSLA... on valuation after its recent stock run," John Murphy, Bank of America analyst, said in a note on Wednesday. The analyst applied average enterprise value to sales and enterprise value to cash flow multiples from "comparable companies" to Tesla and found it was now significantly overvalued. Bank of America said Tesla faces a slew of downside risks including production challenges, continued losses and cash burn from low production and deliveries, elevated cost, and new facility construction. Shares of Tesla rose 0.6% in premarket trading on Wednesday. Tesla is set to report first-quarter earnings on April 29. Analysts expect it to report a profits loss of 21 cents, compared to a $2.90 loss from the same quarter a year ago, according to FactSet. Shares of Tesla had a massive run earlier this year, driven by analysts upping price targets and short-covering by those who bet against Elon Musk's automaker. The stock is now about 30% below its record high of $968.99 in February. — CNBC's Michael Bloom contributed reporting
