Tesla (TSLA) stock is trading higher on Friday despite a prominent analyst slapping a Sell rating on the stock — with valuation the chief culprit.

Tesla, which slid 8% yesterday following reports the EV maker was going to delay its upcoming Aug. 8 robotaxi reveal, is still nearly flat for the year despite a steep early-year sell-off. It’s the sharp climb back higher for Tesla stock — nearly 30% in the past month — that has Joseph Spak at UBS worried.

“TSLA has always traded with a premium attached to it for other, future growth initiatives. However, at current levels, we believe that unidentifiable premium is too significant,” Spak wrote in a note to clients. “Given the lack of visibility and the risk that these growth opportunities materialize on a longer time horizon (or don’t materialize at all), we rate the stock Sell.”

Spak acknowledges that Tesla is more than just an auto company, a claim that CEO Elon Musk has touted for some time now. Musk contends that Tesla is an AI, robotics, and autonomous tech company first, and automaker second. Spak also credited Tesla for “positive developments” in other areas such as its energy business and FSD, or full self-driving software. But, again, valuing those businesses and their long-term potential is difficult, he said.

Spak's valuation breakdown found that at current levels, the market is valuing Tesla’s core auto business at around $60-90 a share given its current sales trends, with the “other” business, like energy, robotics, autonomous, etc., making up the rest at around $175 a share.

The UBS analysis finds that those other businesses are worth around $93 in their view, meaning there is still a 60% premium attached to those businesses, a bridge too far for UBS.

Hence the Sell rating on Tesla, and $197 price target, which the UBS team believes accurately values Tesla, its core auto business, and its other endeavors.

Spak acknowledges the bank could be proven wrong. Tesla stock has traditionally traded more on momentum and not company fundamentals, Spak noted, and this trend could conceivably continue.

A wild card worth noting is Tesla’s upcoming robotaxi day. Though it may reportedly be delayed until October per Bloomberg, Spak believes market sentiment is more negative than positive heading into the event, and a “true upside surprise” could happen — meaning the product or its functionality could be more advanced than initially thought.

While the UBS team believes Tesla is making good progress with robotaxis, it thinks the challenges are still too great, and payoff too far off.

“We believe robo-taxis are a difficult technological endeavor and the business model also may face regulatory hurdles as well as questions around consumer adoption. Thus, we believe a meaningful robo-taxi operation in the US is further out (not this decade).”

Finally Spak said a new, cheaper vehicle — one that Tesla has promised will be unveiled soon — would be more meaningful than the Tesla robotaxi, and could make the firm update its long-term Tesla sales model.

Spak and UBS estimate the standard car or compact market at around 1 million cars a year in the US. And given Tesla’s historical market share of around 40%-50% for the midsize EV market with the Model 3 and Model Y, the opportunity for 450K annual compact EV sales is within the realm of possibility.

Tesla currently has 27 analysts rating its stock a Buy or equivalent, with 19 rating it a Hold and 14, including UBS, giving it a Sell, per Bloomberg.

Pras Subramanian is a reporter for Yahoo Finance covering the auto industry. You can follow him on Twitter and on Instagram.

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