Tesla is still a top EV stock at Morgan Stanley but estimates were trimmed
Spencer Platt

Morgan Stanley cut its base case price target on Overweight-rated Tesla (NASDAQ:TSLA) to $330 from $350 to allow for a greater margin of safety in terms of supply chain and incremental pressures from FX headwinds, input cost inflation, startup costs. The firm also pointed to the risk of profitability in China if political tension heats up and warned Tesla could see some demand destruction if the global economy worsens.
"While initial signs of a slowing consumer present itself in shrinking order-to-delivery times/reduced order backlots, we believe Teslaâs increasingly large size today and in the forecast makes it susceptible to what could be some profound swings in consumer strength and EV affordability," updated analyst Adam Jonas. Morgan Stanley kept its long-term TSLA unit volume forecast of 3.2M units by 2025 and 7.7M by 2030 in place for now.
Morgan Stanley pulled in its automotive gross margin and cash flow for Tesla (TSLA) to account some of the headwinds, including ramping two Gigafactories on separate continents.
On capital allocation, Jonas said the firm is not enthusiastic about share buybacks from TSLA given the other growth opportunities the electric vehicle maker has at its disposal and the importance of building up cash reserves to maintain a self-financing status throughout a range of uncertain economic environments.
Putting the Morgan Stanley caution in perspective, the new PT of $330 still reps more than 60% upside for TSLA from its current level. Morgan Stanley also has a bull case PT of $500 on the EV stock and bear case price target of $150.
Shares of Tesla (TSLA) were down 1.98% at 3:05 p.m. on a rough day overall for U.S. companies with exposure in China.
Sector watch: Toyota is in a mad scramble to catch up in electric vehicles after once being an early Tesla investor.