Tesla (TSLA): At Current Valuation, It's Not Just About the Model 3 Anymore - Morgan Stanley

June 12, 2017 8:12 AM EDT
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Price: $265.25 -1.1%

Rating Summary:
    30 Buy, 18 Hold, 10 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 10 | Down: 4 | New: 31
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Morgan Stanley analyst Adam Jonas raised the bear case on Tesla Motors (NASDAQ: TSLA) to $175 while the bull case remains $511. Meanwhile, the firm maintained an overall Equalweight rating and price target of $305.

Jonas provided his recent thoughts on the stock at $357, starting with the optimistic view:

  1. At this valuation, it’s not so much about the Model 3 anymore…"... Many Tesla investors have spoken of the stock’s potential to multiply in value or to be the next ‘Amazon’. Elon Musk himself has been outspoken about his belief that the company could, one day, be worth more than Apple (covered by Katy Huberty). Could a highly successful Model 3and its progeny achieve this? In our view, no. Could an electric, autonomous semi truck achieve this? We don’t think so. Solar roofs… or Tesla Powerwalls? Not big enough. In our view, there’s only one market big enough to propel the stock’s value to the levels of Elon Musk’s aspirations: that of miles, data and content. When does Tesla make the leap to mobility? It’s been more than a year since Mr. Musk first alluded to Tesla Network and we’ve heard very little on the topic since that time. In our view, this quiet period probably cannot last much longer."
  2. … That said, a path to profitability over the next 12 months could send the stock far higher.
  3. Waymo’s potential valuation has raised the debate about Tesla’s prospects in the shared mobility arena (Tesla Network).
  4. Raising our bear caseto $175(from $50 previously). "We have shifted our bear case valuation from one of asset liquidation/replacement value to one of strategic value."
  5. Our $511 bull case for Tesla is unchanged and is based on both higher market assumptions for the core automotive business and more aggressive assumptions for Tesla Mobility(Tesla Network).

For an analyst ratings summary and ratings history on Tesla Motors click here. For more ratings news on Tesla Motors click here.

Shares of Tesla Motors closed at $357.32 yesterday.

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Morgan Stanley, Tesla, Katy Huberty, Model 3