Tesla sell recommendations dwindle as analysts weigh possible SpaceX deal
Barclays raised its Tesla rating to overweight, while Musk said board committees were examining a merger but cautioned that an agreement was not certain.
Bloomberg’s tally of Tesla analysts shows five sell recommendations among 60 ratings, putting the bearish share at its lowest since early 2015 as expectations of a possible SpaceX combination grow. The count stood at 15 sell calls among 71 analysts when the year began.
Investing.com reported that Barclays lifted its Tesla rating to overweight, setting a US$450 price target in place of US$370. Analyst Dan Levy said a prospective merger had become central to the bank’s bullish case because it could push Tesla shares higher.
BNP Paribas and CLSA have also withdrawn their sell calls. BNP analyst James Picariello set a US$420 target, up from US$266, solely because he saw a greater chance of SpaceX acquiring Tesla. His concerns about Tesla’s cash burn and the speed of its AI efforts remained.
On SpaceX’s earnings call, Musk said the two boards had each created a special committee to consider combining the businesses. He favored a transaction personally but warned that it was not definite. Investor interest in a combination dates to SpaceX’s June IPO.
Under Barclays’ expected structure, SpaceX would acquire Tesla using stock. Barclays said securing approval from holders representing a majority of the total voting power at each company would be difficult. EU merger clearance would probably also be necessary.
Tesla stock advanced 6% on Monday. Its year-to-date decline was 12%, against a 12% gain for the S&P 500. Third-quarter earnings surpassed estimates even though profit dropped 43% year over year.
