Morgan Stanley’s analyst Adam Jonas is one of the few analysts covering Tesla capable of moving the needle with his commentary on the company, which he did this morning.
Tesla’s stock surged 4% in pre-market trading after Jonas issued a new note in which he is much more optimistic about his delivery estimates for the Model 3 and it resulted in an upgrade to an ‘outperform’ rating and a price target of $305.00 – up from $242.00.
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Probably even more interesting than his new Model 3 forecast after predicting it would be a year late to market, Jonas still doesn’t value Tesla’s Energy division or SolarCity in his valuation of the company despite the new price target.
To be fair, he is an automotive analyst, but nonetheless, those divisions are increasingly becoming an important part of the company.
He wrote in the note:
“We still apply zero value to Tesla from its recently completed acquisition of SolarCity and zero value for Tesla Energy.”
Instead, the bulk of his upgrade is attributed to his updated forecast of Model 3 deliveries:
“Adding 75k additional units of Model 3 to our 2018 estimate and nearly 100k units to our 2020 estimate results combined with the out-year impact adds a combined $81 to our Tesla target. Small offsets from the 4Q delivery pre-announcement and higher capex takes our target to $305.”
That’s a significant change for Jonas who said last month that he didn’t expect any significant delivery of the Model 3 in 2018 – making the vehicle about 12 months late to market.
His expectations have apparently changed after a visit at the Gigafactory in Nevada for investors and analysts earlier this month.
The analyst is still pushing for a strong valuation of what he is calling ‘Tesla Mobility’, but it is now known as ‘Tesla Network‘ – the automaker’s upcoming autonomous car-sharing application:
“Excluding the value of Tesla Mobility ($76/share) our price target would be slightly below the current share price. Over 100% of the upside to our $305 price target can be attributed to the value we ascribe to Tesla Mobility.”
Additionally, Jonas is also positive on the potential effect of the new Trump administration on Tesla because of the company’s growing American manufacturing workforce, which is aligned with Trump’s message.
Adam Jonas is ranked #486 out of 4,355 analysts on Tip Ranks with a 49% success rate and an average return of 9.4%. Here’s his track record on Tesla’s stock:
It could be interesting to note that several of Jonas’ major upgrades on Tesla coincidently (or not) came right before secondary offerings by Tesla.
The recent stock price surge (now approaching $250 per share) could encourage Tesla to raise more capital on the market.