Shares of the Palo Alto, California-based company were up slightly to $977.38 Friday in premarket trading.
In a note to clients, Morgan Stanley analyst Adam Jonas downgraded the stock to underweight from equal-weight and cut his price target to $650 from $680.
While Jonas praised Tesla for its role in accelerating the adoption of electric vehicles, he said he believed the recent run-up in the share price to over $1,000 may not reflect a number of important emerging risks, "many of them long-term, that have the potential to impact fundamentals (growth and profitability) in a materially negative way."
Tesla shares raced past the $1,000 mark Wednesday after founder and CEO Elon Musk said it was time for the carmaker to begin the "volume production" of its new commercial semi truck.
In the near term, Jonas said, Tesla must navigate continued challenges in restarting its Fremont facility and confronting light vehicle markets "that may not be as strong as pre-COVID levels."
"Among the many risks facing Tesla at this time, we would rank risks related to U.S.-China relations at the very top," the analyst said. "We believe any potential deterioration of relations with China could disproportionately impact Tesla vs. other stocks within our coverage."
Goldman Sachs analysts, led by Mark Delaney, said they downgraded Tesla to neutral because shares were trading above their upwardly revised 12-month price target of $950.
"We'd look to become more positive on Tesla stock again if we had more confidence in the near to intermediate term trajectory in fundamentals, or if valuation became more attractive," Delaney said.
The analyst said he maintains his view that the electric vehicle market "offers attractive long-term growth, and we think Tesla will be able to sustain a leading position in EVs (and with solid margins."