Tesla gets a price target boost from $1,200 to $1,300 from Morgan Stanley following very substantial Q4 2021 deliveries that exceeded the firm's expectations.
Morgan Stanley analyst Adam Jonas has raised his price target on Tesla to $1,300 after being impressed by the Texas-based manufacturer’s Q4 delivery figures—and expects more of the same in 2022. In fact, Tesla was able to deliver 20% above the firm's forecast, annualizing to over 1.2 million units, already higher than their previous forecast for fiscal 2022.
This performance only underlines that the industry leader continues to grow its lead over the competition. Morgan Stanley suggests thinking of an EV race like a marathon. He points out that Tesla is leading a few miles ahead, while everyone else is getting ready for the race or just starting it.
"Think of the EV race as a marathon. Tesla is in the lead at mile number 21. Everybody else is at mile 2 or still tying their shoes. We struggle with the logic of giving the leader a 'jet pack' to strap on for the rest of the race. How is that positive for everyone else?"
Morgan Stanley model changes:
Volume. The firm raises its FY22 delivery forecast to 1.46 million from 1.22 million previously. Their FY30 volume estimate rises to 8.6 million units vs. 8.1million previously.
EBITDA. The knock-on impact to profitability takes Morgan Stanley's FY25 Auto EBITDA forecast to just over $40 billion vs. less than $38 billion previously. By FY25, forecast Tesla global EBITDA to be greater than the global EBITDA of GM and Ford combined. Morgan Stanley's long-term exit EBITDA margin assumption in their Tesla DCF of 20.5% excludes credits.
DCF/SOTP Valuation. The firm raises its target to $1,300 on the back of the higher top-line and earnings assumptions, which drive modestly higher valuations from the adjacent businesses in their SOTP model (Network Services, etc). Less than 1/2 of their $1,300 target is accounted for by core Auto valuation of $618 per share. No change to the firm's $1,600 bull case or $ 500 bear case at this time.
Tesla shares are Morgan Stanley's "most 'important' stock pick." According to the firm, not owning TSLA means not owning the only company that could make all other EV names obsolete. The company has Giga Berlin, Giga Texas, Gigapress, structural battery, many new models, and other developments coming in 2022.
"At this stage, we believe Tesla is clearly in the financial, human/cultural, technological position to drive industrialization across vehicle manufacturing, battery technology, supply chain, EV infrastructure and other important aspects of the ecosystem (recurring revenue platform, autonomy, etc.)."
© 2022, Eva Fox | Tesmanian. All rights reserved.
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About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.