There’s an Opportunity Brewing in Tesla Shares, Says Morgan Stanley

Tesla (TSLA) shares have been on the end of a severe beating in recent times, with the latest meltdown taking place after the EV leader missed delivery estimates for Q4. That has only exacerbated a stock that already badly impacted by CEO Elon Musk’s ongoing Twitter shenanigans.

However, according to Morgan Stanley’s Adam Jonas, the stock’s awful showing – down by 42% over the past month – is “driven by EV supply > EV demand for the first time since Covid, exacerbated by technical factors.”

Jonas expects the tables will turn on the EV supply/demand paradigm in 2023, with supply finally exceeding demand, reversing the last 2 years’ prevailing trend. And this 'reset' year for the EV market will have widespread implications.

“Within this environment,” says Jonas, “we believe players that are self-funded (non-reliant on external capital funding) with demonstrated scale and cost leadership throughout the value chain (from manufacturing to up-stream material supply) can be relative winners.”

Even before taking IRA (Inflation Reduction Act) benefits into account, for which Tesla is the “biggest potential winner,” Jonas thinks the company is well-positioned to “extend its lead vs. the EV competition in FY23 (both legacy and start-up).”

Not that 2023 will be an easy ride; hurdles to overcome include the weakening macro backdrop, “record high unaffordability,” and growing competition, yet as Tesla “leverages its cost and scale advantage,” Jonas expects TSLA will pull ahead in the EV race. As such, the analyst sees the current share price being an “attractive entry for investors.”

Based on the above, Jonas rates TSLA shares an Overweight (i.e., Buy) along with a $250 price target. This figure suggests the stock will be changing hands for a 120% premium a year from now. (To watch Jonas’ track record, click here)

As usual, Tesla generates plenty of interest on Wall Street; over the past 3 months, 30 analysts have chimed in with reviews and these breakdown into 18 Buys, 10 Holds and 2 Sells, all culminating in a Moderate Buy consensus rating. The average price target stands at $257.96, implying ~127% upside potential from current levels. (See Tesla stock forecast on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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