Tesla’s sell ratings hit an 11-year low as SpaceX merger hopes grow

Only five of 60 analysts tracked by Bloomberg rate Tesla a sell, the lowest share since early 2015. Barclays upgraded the stock to overweight on Monday, calling a SpaceX merger “a key part of the Tesla bull case“, after BNP Paribas and CLSA dropped their sell ratings last week.

Wall Street analysts are dropping their bearish calls on Tesla as a merger with SpaceX looks more likely, Bloomberg reported. Only five of the 60 analysts it tracks now rate the stock a sell, the lowest share since early 2015. At the start of the year, 15 of 71 did.

Barclays upgraded Tesla to overweight on Monday and raised its price target to $450 from $370, Investing.com reported. BNP Paribas and CLSA dropped their sell ratings last week.

“The anticipated merger is now a key part of the Tesla bull case, as it provides upside potential to the stock,” Barclays analyst Dan Levy wrote.

BNP’s James Picariello raised his target to $420 from $266, which he said “exclusively” reflects the higher chance of SpaceX buying Tesla. He is still cautious about Tesla’s cash burn and the pace of its AI work.

Investors have eyed a tie-up since SpaceX’s IPO in June. Talk of a deal grew last week, when Musk said on SpaceX’s earnings call that both boards had formed special committees to study a merger. Musk said he personally favours a deal, but that it would be “an exaggeration” to say one will definitely happen.

Barclays expects an all-stock deal with SpaceX as the buyer. It would need the backing of more than half of each company’s total voting power, which Barclays called a “high hurdle”. A deal would also likely need EU merger approval.

Tesla shares rose 6% on Monday but are still down 12% this year, while the S&P 500 is up 12%. Last week, Tesla’s third-quarter profit beat estimates despite falling 43% from a year earlier.