Morgan Stanley Doubles Down on Tesla Stock

Tesla (NASDAQ:TSLA) isn’t giving investors much to smile about with its latest sales figures. In April, vehicle sales in the UK and Germany sank to their lowest levels in over two years, down 62% and 46% year-over-year, respectively – even as demand for EVs continues to grow in both countries. And it wasn’t just those two, sales also hit multi-year lows in several other major European markets.

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However, while consumers appear to still be turning away in droves from the Elon Musk-led company, Tesla still has a big fan in Morgan Stanley analyst Adam Jonas, for whom the stock remains a ‘Top Pick.’

That’s not because Jonas expects those consumers to suddenly flock back to the showroom. Rather, the analyst simply doesn’t see Tesla as a traditional car company at all.

“We’re often asked what is Tesla’s secret sauce? What’s its moat? Well – it’s not really 1 thing but the combination of 6 attributes that set Tesla apart from its peers,” says the analyst.

So, what are these characteristics that make Tesla so special? Jonas breaks it down using the acronym DREAMS:

• Data: With 7 million Teslas already on the road and projections of over 100 million by 2040, the company is sitting on an unparalleled driving data goldmine.
• Robotics: Tesla designs its own electric motors and actuators in-house. “Just the hands of Optimus have 22 degrees of freedom,” Jonas points out.
• Energy: A key growth engine, Tesla is a leader in scalable battery storage solutions.
• AI: The company boasts a “world class AI team” working on Full Self-Driving, Dojo, and custom chips.
• Manufacturing: Tesla is the “most vertically integrated, US-local sourced auto company in the world.”
• Space: As in SpaceX—what Jonas calls the “data transport layer – the connective tissue of the AI ecosystem.”

And which pillar does Elon Musk see as the most vital to the company’s moat? Undoubtedly, according to Jonas, Manufacturing trumps them all. You have to build the “probes” to gather data, which then helps you refine the probes so they can collect even better data, continuing the cycle of improvement.

“Data defines the software, software defines the hardware, hardware defines the manufacturing,” Jonas summed up. “Elon Musk has used the car industry as a laboratory to develop competency in other areas… The car is to Tesla what the book was to Amazon.”

The coming years will tell us whether Jonas is correct. In the meantime, the analyst rates TSLA stock as Overweight (i.e., Buy), while his $410 price target implies the shares will surge ~49% in the months ahead. (To watch Jonas’ track record, click here)

15 other analysts also take a favorable view of Tesla’s prospects but with an additional 10 Holds and 11 Sells, the overall consensus is Hold (i.e., Neutral). At $284.23, the average price target factors in a one-year gain of a modest 3%. (See TSLA stock forecast)

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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.

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