Morgan Stanley has reaffirmed Tesla (TSLA, Financial) as its top stock pick, increasing its price target from $400 to $430. This adjustment is driven by the rising valuations of Tesla's mobility and network services, partially offset by a decline in third-party battery business valuation.
In the revised sum-of-the-parts (SOTP) model, Tesla's mobility services are valued at $90 per share. By 2040, the fleet size is expected to grow to 7.5 million vehicles, with revenue per mile projected at $1.46 and an EBITDA margin of 29%. The network services division, including Full Self-Driving (FSD), supercharging, and software upgrades, is valued at $168 per share, highlighting its increasing importance in Tesla's business model. By 2030, network services are expected to contribute about one-third of Tesla's total EBITDA, rising to nearly 60% by 2040.
In a bullish scenario, Morgan Stanley sets a price target of $800, anticipating a fleet size of 12 million vehicles by 2040, with revenue per mile at $1.50 and an EBITDA margin of 45%. Conversely, in a bearish scenario, the price target is $200, reflecting potential challenges such as stricter regulations and slower market expansion.
Morgan Stanley notes Tesla's leadership in data collection, robotics, energy storage, AI/computing, manufacturing, and infrastructure, positioning it at the forefront of the autonomous mobility market. The firm believes Tesla's stock will continue to grow through 2025, driven by its unique expertise, despite challenges in the EV market.
