Morgan Stanley is getting more negative over profitability of Tesla’s Model 3 electric car.

The firm’s analyst Adam Jonas slashed his price target to $291 from $376 for Tesla shares, roughly flat to the stock’s Monday close.

“We are making material reductions to our earnings estimates to reflect lingering manufacturing issues with the Model 3,” Jonas wrote in a note to clients Tuesday. “It is our view that the challenges in ramping up Model 3 production reflect fundamental issues of vehicle design, manufacturing process, and automation levels that can weigh against the profitability of the vehicle.”

Tesla shares declined 2.3 percent in Tuesday’s premarket session after the report.

The analyst also noted the company’s significant recent management turnover. He reduced his long-term operating profit margin forecast for Tesla to 9.8 percent from 14.3 percent.

“Following 1Q18 results, we are making significant cuts to our near-term and long-term auto margin forecasts and allow for marginally greater equity dilution,” he wrote. “We see Tesla as trading near fair value with a balanced risk-reward.”

Jonas reiterated his equal-weight rating for the stock.

Tesla did not immediately respond to a request for comment.