Bank of America/Merrill Lynch slashed its price forecast on Tesla (TSLA) shares saying the electric car manufacturer's "long-term viability" is at risk because of its acquisition of SolarCity (SCTY) .
In November, SolarCity and Tesla shareholders voted to approve the electric car maker's $2.6 billion acquisition of the solar power company.
Consequently, Bank of America/Merrill Lynch now holds that the stock will be nearly cut in half over the next 12 months because "positive earnings and cash flow [are] now even more elusive" in light of the combination.
"We believe the SolarCity acquisition introduces material risks to the longer-term viability of TSLA, while the recent capital raise only serves to further dilute potential shareholder value," Bank of America/Merrill Lynch analyst John Murphy wrote.
Murphy, who has an "Underperform" rating on the stock, sees Tesla shares falling to $165, a 46% drop from where the stock closed Monday at $308.03 a share.
Shares of Tesla were lower during mid-morning trading on Tuesday.
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