Tesla was revving things up again in the stock market on Tuesday, after Morgan Stanley predicted a 50 percent rally in shares in the agency's most interesting narrative of late.
Shares of the electric vehicle were up 6.5 percent in after-hours sessions as analysts remain optimistic about the company's fundamental case, with shares seen to run up to $1,200 per share.
The electric car manufacturer's stocks have risen more than 300 percent in the last two quarters, and Morgan Stanley's projection for the short term is that the rally will continue, with shares climbing another 50 percent from its current level near the $800-per share mark.
But the agency's overall forecast is that Tesla's stock will have a tough time maintaining its solid momentum, as it keeps its Underweight rating on the company and elevated its core price goal to $500 from $360 - an almost 70 percent drop from its current price.
In a memo to shareholders, analyst Adam Jonas said that "we believe the stocks provide an unfavorable risk-reward skew" compared with other electric vehicle stocks.
Jones pointed out that their "new bull case" shows 4 million units of vehicle volume by 2030 with a 12 percent operating margin. The figure, Jones added, compares with their base case outlook of 2.2 million units and a 10 percent operating margin by 2030.
Morgan Stanley offers three different scenarios for where Tesla's stock could be headed: bull, bear, and base. It's a complex case, considering that "base case" largely viewed the company's real standpoint, but one that has been widely embraced by Wall Street, especially for an unpredictable stock like Tesla.
The scenarios fundamentally give market strategists the opportunity to have it both ways: Make a strong case for how Tesla's stock could grow while having a negative disposition in case the growth unwinds and the stock falls.
Jonas explained that the bottom line of his price objective is that investors should anticipate "a very difficult" first quarter for the electric carmaker. He predicts Tesla will roll out 89,000 cars in the period, below Wall Street's unanimous estimate of 99,000, and will post a quarterly decline of around $440 million.
Shares of Tesla shot back past $850 Tuesday, after Bernstein analyst Toni Sacconaghi almost doubled his share price aim, saying he did not see any pessimistic catalysts in the offing for a stock that was not very expensive.
Sacconaghi hiked his stock price goal to $730, which is still about 15 percent below existing levels, from $325. He replaced the market perform rating that he has maintained on Tesla for at least the last three years.
