Replacing Ford! Morgan Stanley lists Tesla as its top automotive stock, expecting a 40% upside potential in stock price
Tesla replaces Ford as Morgan Stanley's top pick for US auto stocks, with Morgan Stanley reiterating its overweight rating on Tesla stock and a target price of $310, causing Tesla's stock price to surge over 6% in early trading on Monday
Morgan Stanley has nominated Tesla to replace Ford as the preferred car stock in the U.S. automotive industry, believing that Tesla's stock has a 40% upside potential, but stating that Tesla's expectations for autonomous taxi services are "too high".
Influenced by this news, Tesla reversed its previous week's decline of 8% to $219.80 and saw its stock price rise over 6% in Monday's morning trading.
On Monday, July 29th, Eastern Time, Adam Jonas, a well-known automotive analyst at Morgan Stanley and a Tesla bull, released a new research report reiterating an overweight rating on Tesla stock with a target price of $310. On Morgan Stanley's list, Tesla leads the U.S. car stocks, with Ford in second place and Ferrari in third. Electric vehicle startup Rivian ranks 11th.
Jonas emphasized that as demand forecasts for electric vehicles have declined, Tesla is reducing its resources allocated to its automotive business. Cost-cutting measures and restructuring efforts have mitigated the downside risks of Tesla's electric vehicle business and have positioned the company as a leader in the zero-emission vehicle credit market. Jonas wrote:
"While Tesla is still producing cars, we note that the company is actively shifting incremental resources, technology, personnel, and capital away from the automotive sector. We find that Ford management discussed electric vehicles much more than Tesla did in the second-quarter conference call."
"Tesla's zero-emission vehicle (ZEV) credit revenue in the second quarter was approximately $2,000 per vehicle, more than double the recent figure. With more traditional automakers (including Ford) scaling back electric vehicle plans, Tesla 'may occupy a more dominant position in the lucrative ZEV credit market in the future.'"
According to media reports, electric vehicle startup Nio announced last week that it will not enter the autonomous taxi market, with CEO Li Bin expressing doubts about whether this will become a "sustainable business." Jonas stated that recent expectations for Tesla's Full Self-Driving (FSD) and robotaxi services "may be too high"