Tesla Stock at a ‘Reset’ Risk from FSD/Autonomy – Morgan Stanley Analyst
2022.07.26 15:18
Tesla Stock at a ‘Reset’ Risk from FSD/Autonomy – Morgan Stanley’s Jonas
By Senad Karaahmetovic
A Morgan Stanley analyst reiterated an Overweight rating and a $1,150 per share price target on Tesla (NASDAQ:TSLA) after “better-than-expected” Q2 results.
This is despite the raised FY22 auto gross margin estimates to 27.4% from the prior 26.6%. However, the raised auto gross margin forecasts are offset by lower FCF forecasts for FY22, FY23, and FY25.
On Tesla stock trading above $800 per share, the analyst said he is “pleasantly surprised that the market has ‘stuck with Tesla’ in the face of geopolitical and macroeconomic uncertainty.”
“Our message to our clients is that Tesla in our view is still in the ‘must own’ category for any energy transition/BEV portfolio. However, the company should not be seen as invincible to the rapidly changing consumer environment. As Tesla becomes a larger company, expanding capacity further to what we see will be eventually 10 plants by end of decade, the company is, at the margin, exposed to the forces that impact mass market auto OEMs,” the analyst added in a client note.
However, the analyst also warned that Tesla shares are exposed to a ‘reset’ risk around FSD/Autonomy, given the slow progress made on these fronts.
“This is not a comment so much on Tesla’s autonomy efforts, which we believe may prove successful over time, but believe the broader industry efforts around autonomy, while both noble and profound, are likely to miss expectations of the market (in light vehicles, at least) due to technological and regulatory factors,” the analyst added.
