Morgan Stanley Read on Tesla's (TSLA) Positive Shipments Surprise
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Morgan Stanley analyst Adam Jonas reiterated an Overweight rating and $880.00 price target on Tesla (NASDAQ: TSLA) after 1Q deliveries (184,700) were 7% above consensus and 20% above MS expectations. The analyst believes Tesla’s strategy prioritizes volume and capacity expansion while vertically integrating on the battery cell side to control its own destiny.
Despite the upside, the analyst remains "very concerned" about battery cell supply shortages. He believes this could disrupt short-term OEM volume targets and stated "In our opinion, if an OEM has not already made comprehensive decisions around cell supply sourcing (or in-house manufacturing) we believe investors may apply an elevated execution discount to their projections. Within our US coverage, we place Tesla and GM in a unique category of making concrete steps to ensure supply and take steps to fully/partially vertically integrate cell supply shortage into their respective industrial complexes."
He went on to state "The Biden Administration infrastructure plan calls for $174bn to be allocated to support EVs. This is symbolic as to the formation of a national EV policy. However, we believe there are many unanswered questions on both funding and execution, including spending on grid stability, US-sourced/sustainably sourced battery supply, and build out of closed-loop recycling infrastructure."
Shares of Tesla closed at $691.00 yesterday.
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