Tesla Extends Monday’s Gains; Morgan Stanley Bullish on the Stock

Morgan Stanley has given Tesla an overweight rating for the first time in several years, forecasting that the electric automaker is on the verge of a “profound model shift” from selling cars to generating high-margin software and services revenue.

Morgan Stanley analyst - Adam Jonas, stressed in a note that the Tesla business is one of multiple components, and solely considering cars means painting an incomplete picture. His valuation now further includes the company’s energy storage, insurance business and network services. 

He has also upgraded Tesla shares from long-term equal-weight to overweight and increased his price target by 50% to $540, suggesting a 22% upside for the stock.

Indeed, there appears to be reason for positivity. The Tesla stock has increased fivefold this year, and could well be set for an even brighter future ahead, given Monday’s news that it will finally be joining the S&P 500 index in December. The news got Tesla rallying well into Tuesday, rising 8.2% to $441.61.

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