Tesla at $2,000 is new ‘bull case’ for Morgan Stanley

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“Resilient” demand for Tesla Inc. vehicles is making the Silicon Valley car maker appear as a less risky company that is on more solid financial footing than other car makers.

That’s from analyst Adam Jonas of Morgan Stanley, who on Tuesday upped his price target on TSLA, +2.58% shares to $740, implying a downside of around 47% from Tuesday’s share price. Jonas also set a “bull case scenario” stock price of $2,070, an upside of around 48%.

According to FactSet, which surveyed 32 Tesla analysts, the average price target on the stock is $778, with a handful of outliers setting price targets above $1,000. Recently, analyst Dan Ives of Wedbush also set a “bull case scenario” for Tesla shares at $2,000 alongside his price target of $1,250.

Tesla’s second-quarter production and delivery numbers were “significantly ahead” of Morgan Stanley’s expectations in a three-month period that was shaping up to be “extremely difficult,” Jonas said.

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“Tesla has demonstrated one very powerful differentiating quality vs. many of its auto peers: demand is holding up better,” Jonas said in his note. Tesla may see some cash burn from its working capital but it is “in position to post an above break-even U.S. GAAP result in (the second quarter).”

Some long-term concerns remain, chiefly around profits in China, “poor” fundamentals for the auto industry in general, and the “inevitable” competition in EV and in autonomous vehicles from well-heeled companies such as Amazon.com Inc. AMZN, -0.29%, Apple Inc. AAPL, +0.73%, Alphabet Inc. GOOG, +0.54% and others, Jonas said.

Tesla shares have been on a tear in recent sessions, boosted by the quarterly sales data, and on Tuesday were poised for a fifth straight record close. The stock has gained 235% this year, contrasting with losses of 2% and 8% for the S&P 500 index SPX, -0.22% and the Dow Jones Industrial Average. DJIA, -0.73%