Tesla Inc.'s TSLA run-up since it announced profitability last quarter may not be repeatable, Cowen said Monday in a bearish note. 

The Analyst

Cowen's Jeffrey Osborne kept an Underperform rating on Tesla, but raised the price target from $190 to $210.

The Thesis

"We believe the large amount of over exuberance related to the demand for Tesla's products in the mid to long term has increased over the past few months, and we believe much more successful penetration is baked into the stock than is likely to play out," Osborne wrote in a note to investors.

Tesla will likely deliver about 356,000 vehicles for the year, just below the low end of the 360,000-400,000 delivery guide for the year, he said. Osborne raised his estimate for fourth-quarter deliveries, however, saying they should come in around 101,000, instead of 95,000, reflecting better expectations for both deliveries in the Netherlands and China ahead of reductions in electric car subsidies in 2020.

Chinese, Dutch Help Not Enough

But those two markets won't offset a general settling-in for electric vehicles.

Excluding the Netherlands and China, Osborne expects a 9% quarter-over-quarter drop in the fourth quarter for Model 3 deliveries, and a 7% year-over-year decline. That, he said, "highlights the demand saturation we are seeing across most mature markets as we shift from pent-up demand to steady flow demand."

A lot more can go wrong for Tesla, Osborne said, especially if the car maker can't lower Model 3 production costs to keep margin pressures down.

"We continue to see risks to the company's growth story, which we believe is likely to be challenged as competition enters the market and the Model 3 sales steady run rate is realized," Osborne wrote. "We don't see sustainable profitability in the near to mid-term."

Price Action

Tesla shares traded around $431.60 at publication time.