Morgan Stanley has increased their price target for Tesla (TSLA) more than 30% from $900 to $1,200. Analyst Adam Jonas also reiterated on overweight rating for the stock, and increased his bull case price target to $1,600.
In a 23-page update posted on Sunday, Jonas said an increase in their production volume estimates was one of the biggest reasons for the higher price target.
Citing the better than expected Q3 2021 earnings report, Jonas said their previous estimate of 5.8 million units by 2030 has been upped by 40% to 8.2 million units by the end of the decade.
“The change in target is driven predominantly by higher volume. Our previous forecast of 5.8 mm units by 2030 implied an annual growth rate of 23% (from 2021 to 2030) which trailed overall EV market growth. Our revised volume forecast of 8.1mm by 2030 units implies an annual growth rate of 28% which is slightly more than 1/2the 50% growth rate targeted by the company over the long term which they reiterated in the 3Q call.”
Other reasons for the change cited by Jonas include the automaker’s staggering 30% gross margins. In the update he said Morgan Stanley expects this number to contract slightly to 27% by 2030.
Jonas also said their revenue estimate has changed and now expects Tesla to bring in $436 billion by 2030.
Even with the $1,200 price target, Jonas is only estimating an annual growth rate of 28%. That is nearly half of what Tesla said it expects to grow by (50%) over the coming years during its Q3 2021 earnings call.
Disclosure – Darryn holds shares of Tesla, Inc. (TSLA) and has no plans to change any positions within 72 hours.