Morgan Stanley analyst Adam Jonas downgraded Tesla (TSLA) to Underweight from Equal Weight with a price target of $360, up from $250. The stock closed Wednesday down $19.42 to $518.50.

The analyst sees an unfavorable risk/reward at current valuation levels following the stock's recent rally. Further, he believes risks to Tesla's long-term Chinese business may not be fully appreciated by the market. Four factors have driven Tesla's share price up 105% over the last four months, namely stronger than expected global demand for its vehicles, China announcements that show the company's expansion into the world's largest electric vehicle market, supportive incentive developments and positive sentiment around its product expansion, Jonas tells investors in a research note.

The analyst, while admitting near-term momentum and sentiment around the stock is very strong, questions the "sustainability of the momentum." Jonas increased his expectations for Tesla's core auto business while decreasing his expectations for the mobility business, resulting in the price target raise to $360.