Morgan Stanley's Adam Jonas, one of the most bullish analysts on Tesla Motors Inc., joined the ranks of those who have panned Elon Musk's $2.86 billion proposal to combine the automaker with solar-panel provider SolarCity Corp.
Jonas, whose firm has underwritten securities offerings for Tesla, lowered his recommendation on the stock Thursday to equal-weight from overweight and reduced his 12-month target for the stock price to $245 from $333.
"While there may be any number of lucid arguments supporting the strategic rationale of a combination, we believe many of the benefits could have been achieved through arm's length/strategic partnership and without the risks inherent in exposing Tesla shareholders to the financial and capital markets risks faced by SCTY," Jonas wrote in a report to clients.
Tesla shares sank 10 percent on Wednesday to $196.66 after Musk announced plans to bid for SolarCity. The billionaire is the largest shareholder in both companies, prompting analysts and investors to say the deal was problematic from a corporate governance perspective.