Barclays analysts downgraded Tesla (NASDAQ:TSLA) shares to Equal Weight from Overweight as they believe the recent sharp run-up in shares is ignoring questions on near-term fundamentals.

Since its bottom in late April, Tesla stock has rallied ~70% vs. S&P 500 +8%.

While Tesla stock movements tend to be driven by more than fundamentals sometimes, analysts are cautious to jump on the bandwagon. They believe that the rally is mostly driven by investors’ renewed love for tech stocks, as well as by the excitement over recent announcements that Tesla will open its Supercharger network to other brands.

“Yet while we aren’t surprised that the stock has participated in the rally, we believe it is prudent to move to the sidelines,” analysts said in a downgrade note.

“To be clear, we see significant long-term opportunity for TSLA – a view which underpinned our prior Overweight rating. We continue to see TSLA as the long-term winner amongst OEMs in the race to an EV world, with a strong “balance of the two clocks.” And excitement might build in the late 2024/2025 timeframe as TSLA begins to ramp on the “Model 2”, its low-cost model, which will mark TSLA’s push for mass scale,” analysts added.

This is all in addition to the market seeing Elon Musk’s company as “more than a carmaker.” Still, analysts believe the market is ignoring near-term fundamental challenges.

“The relative disregard of challenges to near-term TSLA fundamentals amid the sharp rally is our key concern on the stock, and at the core of our downgrade to an EW rating. We see a number of underlying weak points in the near-term TSLA narrative.”

The analysts also see potential for TSLA to exceed expectations on 2Q deliveries.

“Yet with further inventory build likely expected, this could add to questions on discounting/margin floor,” they concluded.

Tesla shares are up 122.8% year-to-date. Barclays’ new price target is $260 per share (up from $220).