Morgan Stanley Reiterates Overweight and $1,200 PT on Tesla (TSLA) But Says Don't Expect Shares to Trade up to Such a Level in NT

October 26, 2021 8:34 AM EDT
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Morgan Stanley analyst Adam Jonas reiterated an Overweight rating and a $1,200.00 per share price target on Tesla (NASDAQ: TSLA) after the stock gained 12.66% yesterday to push the market cap over $1 trillion.

Tesla stock soared on the announcement Hertz ordered $4.2 billion worth of EVs to be delivered until the end of 2022. Jonas weighs in with five thoughts on the TSLA stock after the company entered the $1 trillion club.

  1. Tesla’s market cap has increased today by an amount roughly equal to 2x of Ford's market cap.
  2. The Tesla you see today reflects a very differently resourced, pre-COVID Tesla. Jonas argues Tesla will further evolve over the next 12 to 18 months.
  3. We believe the use case of EVs is ideal for many dense fleet applications ranging from final mile delivery, logistics and rental duty cycles.
  4. Every 1mm units we assume Tesla can sell by 2030 is worth approximately $50bn of revenue (auto + services), $10bn of EBITDA and (at 15x to 20x EV/EBITDA) approximately $150 to $200 of value per share.
  5. Tesla shares have a tendency to be quite volatile and driven by a wide range of market forces that are difficult to comprehend.

“We believe Tesla will use ‘learnings’ from their fleet customers to better understand how their vehicles (battery, autonomous systems) perform under high mileage/high utilization duty cycles like car rental. Over time, we would expect to see Tesla vertically integrate its hardware/OS/network capability into captive fleet management applications,” Jonas said in a client note.

While the analyst reiterated a $1,200.00 per share price target on TSLA stock, he doesn’t “have any expectation that the shares will trade up to such a level in the near term.”

Shares of Tesla closed at $1.024.86 yesterday.

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