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Citing advances in autonomous vehicle (AV) technology and embedded artificial intelligence as main drivers, Morgan Stanley (NYSE:MS) has raised its price target for Tesla (NASDAQ:TSLA) to $430 from $400. It also presents an optimistic target for Tesla's bullish scenario, assigning an $800 price per share.
Analysts pointed out Tesla's leadership in autonomous mobility based on its expertise in a variety of areas including data collection, energy storage, robotics, and artificial intelligence. In the updated sum-of-the-parts model, Tesla Mobilityits autonomous rideshare businessis valued at $90 per share. With a 29% EBITDA margin, the business is expected to run a 7.5-million-vehicle fleet by 2040 producing $1.46 per mile in income.
Another important growth engine is Tesla's Network Services, which comprises software, supercharging, and Full Self-Driving subscriptions. Valued at $168 a share, Morgan Stanley projects this division will account for almost 60% of Tesla's EBITDA by 2040.
Under Adam Jonas, the analysts claimed the value does not currently represent Tesla's potential in aviation and maritime embodied artificial intelligence areas. They envision Tesla's first fleet of city-based autonomous cars starting by 2026 and broad acceptance after 2030.The bear case value for the company stays at $200.
This article first appeared on GuruFocus.