Tesla (TSLA) - Get Report was rising sharply Tuesday after analysts at Morgan Stanley reversed their bear case against the electric vehicle company and turned bullish with an increased price target that represents a 50% upside from the stock’s closing price on Friday.
Morgan Stanley analyst Adam Jonas now has a $1,200 price target on the stock, up from the firm’s previous view of $650 a share and about 50% higher than the company’s closing price on Friday of just above $800. Jonas' price target would give Tesla a market cap of $220 billion.
Jonas also raised the base case for Tesla to $500 from $360 a share thanks to the firm’s view that Tesla is in position to become a key battery supplier for other electric vehicles as it expands its Gigafactory capacity.
The bull case sees Tesla winning 30% of the global electric vehicle market, which could include 4 million deliveries by 2030. Tesla also has the opportunity to supply powertrains, including batteries and electric motors, to other automakers, according to Jonas.
Morgan Stanley noted that Tesla shares have inflated sharply over the past six weeks, rising 91% year to date though the reasons for the rise range from good results, a short squeeze, the opening of a key new factory in China, an extreme case of investor fear of missing out or even all of those factors combined.
The average analyst price target for Tesla is $489.47, according to Bloomberg, which is 39% below the stock’s current trading level.
Tesla shares were rising 5.7% to $845.58 in trading Tuesday.