Morgan Stanley sees value opportunity as Tesla (TSLA) reaches 2-year low

November 23, 2022 7:15 AM EST
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Morgan Stanley reiterated an Overweight rating and $330.00 price target on American electric car maker, Tesla (NASDAQ: TSLA) as continued weakness has brought the stock to a 2-year low. However, as the company approaches Morgan Stanley’s $150 bear case, driven by price cuts in China, decelerating EV demand, and other market currents, analyst Adam Jonas believes that there may be a value opportunity emerging.

Jonas wrote in a note, “Tesla is the only name we cover that generates a profit (before incentives) on the sale of EVs. Tesla is the only self-funding pure play EV name we cover and has achieved a unique position to secure supply of the necessary battery metals and related up-stream supply necessary to produce EVs at multi-million-unit scale. In a slowing economic environment, we believe Tesla’s 'gap to competition’ can potentially widen, particularly as EV prices pivot from inflationary to deflationary.”

With respect to the Inflation Reduction Act, Jonas believes that Tesla is by far the best positioned OEM in terms of potential eligibility for consumer tax credits and for Section 45x production credits. The current share price offers approximately 100% potential upside to Morgan Stanley’s $330 price target, which is the highest upside to target seen from Tesla in over 5 years.

Shares of TSLA are up 1.86% in pre-market trading on Wednesday.

By Michael Elkins | [email protected]

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