Tesla Motors Inc (NASDAQ:TSLA) received a rare gust of cold air on Thursday from a pretty ardent member of the TSLA camp.
Morgan Stanley analyst Adam Jonas said he was downgrading Tesla stock from “overweight” to “equal weight” and dropping his 12-month price target on TSLA from $333 to $245 in the wake of its offer to buy out fellow Elon Musk company SolarCity Corp (NASDAQ:SCTY).
Says Jonas:
“The 26% reduction in our price target is mostly driven by a higher risk premium we believe should be demanded by investors following the surprise proposal to acquire SolarCity. Additionally, we have also marked-to-market our DCF and earnings model to fully reflect the impact of the capital raise and exercise of stock options by CEO Elon Musk in May.”
However, Adam Jonas said that because it’s uncertain whether shareholders will actually approve the deal, “we have not made changes to our operational assumptions, and have not, at this stage, modeled in an acquisition of SCTY.”
The larger bearish mindset behind Jonas’ take on Tesla stock has to do with three factors he believes are most important to shares’ price: “(1) The quality and appeal of its cars, (2) the pace of cash consumption, and (3) the company’s ability to access capital markets to fund ambitious investment and growth objectives.”
The analyst doesn’t see the SolarCity deal helping any of these points.
TSLA shares were mostly unchanged in Thursday trading, with most of the immediate skepticism of the deal likely priced in thanks to Wednesday’s 10%-plus drubbing.
Oppenheimer analysts downgraded Tesla stock a day earlier, dropping it from “outperform” to simply “perform.”
