Tesla stock jumped as Morgan Stanley raised its price target for the automaker to a Wall Street high of 810 from a previous forecast of 540. Tesla (TSLA) also likely is rallying as Georgia runoffs signal a Democratic Senate control is likely, raising the prospect for further green energy policies.
The boost comes after Tesla reported record deliveries in the fourth quarter. Tesla delivered 189,750 EVs in the quarter for a total of 499,550 in 2020, just shy of its stated goal of 500,000.
Morgan Stanley Analyst Adam Jonas said that, “Despite the extraordinary run in the share price, we continue to believe that Tesla can outperform vs. our sector in 2021.”
Jonas, who maintains an overweight rating on Tesla, cautioned last month that Apple’s rumored entry into the market could be a game changer. He said in a note that “Apple’s potential entry into autos represents perhaps the most credible/formidable bear case for Tesla’s stock that investors have had to consider for some time.”
Shares gapped up 5% to a fresh high of 772.20 on the stock market today. MarketSmith chart analysis shows Tesla, an IBD Leaderboard stock, is well extended past its 466 buy point. Investors may choose to take some profits at this point.
Jonas believes Tesla is still the best-positioned EV and autonomous carmaker, “due to its people, its technology, business model and access to capital.”
“Furthermore, it is important to note that the company has no entanglement with the environmental liabilities that burden its legacy competition,” Jonas added. “Put it all together and we believe Tesla’s business model can unlock recurring mobility services revenue faster and more profitably than the competition.”
Jonas now expects Tesla deliveries in 2030 to hit 5.2 million units, a 27% increase from his previous target of 3.8 million. Meanwhile, CEO Elon Musk has said Tesla will make 20 million vehicles by 2030.
Democratic Senate Boost?
With Democrats likely to pick up both seats from Tuesday’s Georgia runoff elections, that will leave the Senate at a 50-50 Democrat/Republican split. Vice President-elect Kamala Harris will hold the tiebreaker for the Democrats. That makes green energy policies more likely. However, it’s not clear how much could get through the Senate, with moderate Sen. Joe Manchin of coal state West Virginia holding the balance of power.
A Joe Biden administration already was likely to reestablish fuel mileage and emission standards. Those would act as a de facto mandate for legacy automakers to ramp up U.S. electric-vehicle efforts. The federal government also won’t try to block California and any other states setting explicit electric-vehicle mandates.
Tesla could hope for renewed federal EV subsidies for the automaker. However, only Tesla and General Motors (GM) have hit the EV sales limit on the subsidies, as GM’s new EV push won’t kick in until 2022. Other automakers, including Ford (F) and Volkswagen (VWAGY), continue to enjoy $7,500 federal tax credits on EV sales.
GM stock rose 4.2%, flashing a buy opportunity on a 10-week line rebound as it also retakes its 21-day line.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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