Tesla (TSLA) Thoughts As shares Approach $420 bvg- Morgan Stanley

Morgan Stanley analyst Adam Jonas reiterated an Equalweight rating and $250.00 price target on Tesla (NASDAQ: TSLA) noting that he is not bullish on Tesla longer term despite a potential surge in sentiment through 1H20. The analyst expects the company to be perceived more and more like a traditional auto OEM resulting in the valuation premium shrinking over time. Keeping this in mind, he offered several sobering thoughts:

1) At $420, Tesla´s enterprise value is approaching $85bn which is greater than the combined EV of Ford + GM (defined as market cap + net industrial debt, excluding pensions).

2) What appears to be driving the stock is an investor acknowledged lead in BEV with the company about to demonstrate to the market what margins they are capable of when they make cars somewhere other than Silicon Valley.

3) Sentiment seems to be at a high just a few months after Tesla´s unsecured bonds were trading
in the 80s. The most common criticism the analyst is fielding from investors is how he can have a bear case as low as $10.

The analyst stated "From our conversations with investors, we find it is extremely difficult for bulls and bears alike to conceive of an event path that interrupts the recent string of positive momentum. Debates like potentially saturated US demand, future investment/capital needs appear overwhelmed by expectations of positive margin inflection in China, Cybertruck and a pull-forward of Model Y".

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

Shares of Tesla closed at $423.81 yesterday.

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