Tuesday, February 25, 2014

Tesla Shares Surge on Morgan Stanley Report -- WSJ Blog


Disclosure: Long $TSLA on the bell at $236


Feb 25 at 09:51

By Mike Ramsey

      Tesla Motors Co. might be on the verge of disrupting two industries,
warranting a share price of $320, says Morgan Stanley analyst Adam Jonas, in a
note to investors released Tuesday.
      It's shares surged 11% to $241.18 in early trading on the Nasdaq after
Mr. Jonas released his note.
      That new share price target is up from $153. Its shares have surged
following an adjusted $46 million fourth-quarter profit and reports of rising
production capacity and demand.

      Tesla is expected this week to announce plans to build a new battery
factory along with partners that will be able to take raw materials in on one
side and produce batteries out the other side, lowering the cost of battery
cells. Mr. Jonas thinks that the cell production has the potential to have Tesla
become a major competitor in the electrical grid storage business.
      "Tesla's request to disrupt a trillion [sic] $ car industry offers an
adjacent opportunity to disrupt a trillion $ electric utility industry," Mr.
Jonas writes, in a note titled "Nikola's Revenge: TSLA's New Path of
Disruption."
      He estimates that Tesla will be producing 370,000 vehicles a year by 2020,
up from 22,400 last year. By 2028, the company should be over 1.1 million units
of production, and the Tesla's out in service could be used as back-up grid
storage for the utility industry. Much of the volume is connected to Tesla's
planned " Gen 3" vehicle, which the company aims to put out in 2017 with 200
miles of electric range and a starting price around $35,000.
      His bear case for Tesla still estimates that the company will be making
220,000 vehicles a year by 2020, warranting a $100 a share target. Porsche, a
division of Volkswagen AG, sold a record 162,145 vehicles in 2013, for
comparison.

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