Barclays upgraded Tesla to overweight from equal weight, citing a potential merger with SpaceX. The bank raised its price target to $450 from $370, while the shares remain down for the year.
Barclays upgraded Tesla to overweight from equal weight on Monday, arguing that a potential SpaceX merger makes the stock a buy. The bank also hiked its price target to $450 from $370, which suggests 21% upside from Friday's close.
Analyst Dan Levy said in a client note that dialogue around Tesla has skewed heavily toward a combination with SPCX. He added that a combination is heavily expected, with some premium to TSLA stock, which Barclays believes should drive upside.
Elon Musk said last week that a merger would be a "good idea", according to CNBC. He also noted that committees at both companies have been formed to discuss a potential combination.
Levy sees support beyond the deal. He wrote that the auto business is on track to grow this year after two years of declines, and that 2027 should bring further upside from demand spurred by full self-driving and rising exports from Giga Shanghai. Tesla also noted that its Energy business is nearly sold out for 2027 given demand from data centers, which Levy believes could support growth of more than 50% in shipments.
Of the 49 analysts covering Tesla, 25 have a buy or strong buy rating, while 22 have a hold, according to LSEG data. Shares have fallen more than 17% year to date.
The analyst also noted that Tesla's robotaxis have seen a sharp inflection in miles driven, which gives Levy more confidence the company can compete with Waymo's fleet.
Source: CNBC
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