Oppenheimer downgraded Tesla shares to perform from outperform and removed its price target of $385.
"While we remain bulls on the solar industry, we do not view this acquisition as the best and highest use of TSLA's capital and human resources given the potential return on capital possible in the electricity industry (typically ~8%-9%) versus the potential leverage of the TSLA auto platform which we believe could demonstrate [return of invested capital] of 15%-20%+," they said in a Tuesday note to clients.
Meanwhile, RBC Capital Markets analyst Joseph Spak said in a note Tuesday that while Tesla sees a number of synergies from the transaction, it will not be well received by shareholders.
"We suspect the market will be more skeptical of the strategic rational and the financial/cash flow strain this could add to the TSLA story. By owning the asset, we believe TSLA may be trying the investing partner approach they have taken with shareholders and asking them to stick with them for something they potentially didn't sign-up for," Spak said.