Morgan Stanley Raises Tesla TSLA Bull Case to $2,500 and PT to $1,050 from $740

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Morgan Stanley raised its Tesla (TSLA) target price for the second time this month, and the agency's bullish forecast suggests a 70% rise in the stock. The firm raises the Tesla bull case to $2,500 and the target price to $1,050 from $740. 

"Our revised $1,050 price target is based on 3mm units by 2030 with 2x industry margins and ASPs."

Morgan Stanley stressed that it is becoming increasingly clear that Tesla will become a very large company, leaving the world's largest luxury OEMs behind. For the first time in 10 years of work, the analytical firm begins to model this company as a very large automaker.

"It's becoming increasingly obvious that Tesla is going to become a very large company, approaching (if not exceeding) Toyota or VW revenues in the next decade and leaving the world's largest luxury OEMs behind. For the first time during our 10 years of coverage, we're starting to model this company as a very, very large auto maker."

According to Morgan Stanley's forecast, revenues in 2030 will amount to more than $170 billion, which is significantly higher in terms of revenue than Ford or GM. The firm admitted that it had previously mistakenly assumed that legacy OEMs would have had a much more advanced strategy to put pressure on Tesla's market share. But now it became clear that Tesla had much more freedom to expand than Morgan Stanley originally thought.

"One year ago, we believed the legacy OEMs would have had a far more advanced strategies position to pressure Tesla market share; however, Tesla has had, in our opinion, much more freedom to expand than we initially thought, with legacy OEM EV timelines 1 to 2 years further out than our initial expectations."

According to 2Q 2020 results, the firm has restructured its revenue model to include greater model granularity (Cybertruck, Semi, Multipurpose Van, etc), raising their 2030 volume forecast to 3 million. The new forecast, which builds on the company's demonstrated strategy of rapidly expanding production capacity, gives Tesla a loan for nearly three additional plants.

"Our forecasts give Tesla credit for nearly an additional three full factories of production, which we see as reasonable given the company's demonstrated strategy of rapid capacity expansion (three factories currently under construction/pre-construction)."

 

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Article edited by @SmokeyShorts, you can follow him on Twitter

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