Morgan Stanley Says Buy Tesla (TSLA) on Weakness, Reiterates Overweight
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Morgan Stanley analyst Adam Jonas reiterated an Overweight rating and $900.00 price target on Tesla (NASDAQ: TSLA) after a sharp sequential decline in April deliveries and a Reuters article claiming Tesla is potentially halting its plans to expand production in Shanghai have reduced investor expectations for Tesla’s revenue contribution from the world’s largest car market. The timing of these issues coincides with a broad market rotation away from high-growth names and despite the article, neither Tesla nor the Shanghai city government confirmed the news.
The analyst stated "we see room for sentiment to continue to deteriorate on the name from levels of expectations in China that may still be too frothy, in our opinion. We believe the pullback provides an emerging opportunity for investors to increase exposure to Tesla in their EV/Auto 2.0 portfolios and we are a buyer on this weakness as our $900 price target embeds what we believe to be some of the most conservative assumptions about Tesla’s long-term standing in China on the street."
Regarding the importance of the China market, he went on to state "Over the course of 2021, we forecast China to account for 25% of Tesla unit volume. Going forward, we forecast China to peak at 29% of Tesla volume in 2022, and then fall very significantly".
Shares of Tesla closed at $570.98 yesterday.
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