Is Tesla (TSLA) overvalued? That is a question that has been asked many times. If you look at the EV leader as a “pure car company,” then yes, says Morgan Stanley’s Adam Jonas, Tesla is overvalued.
“However,” the 5-star analyst went on to say, “the company may be substantially undervalued as a renewable energy on-shore infrastructure company.” In fact, Jonas views Tesla as the “ultimate battery capex play.”
What recent events have shown us is that the world needs to “transition off of the fossil fuel economy (aka the molecular energy economy)” and into the renewable economy. More crudely, the combined effect of war + inflation will result in “energy innovation.”
And here investors must ponder the new energy supply chain and supporting infrastructure. In the year ahead, Jonas expects Tesla, and fellow auto industry luminaries to show investors how important they are for this transformation to take place. With Tesla leading the way, Jonas expects “many other auto companies to play a critical role in re-architecting the renewable energy/transport industry.”
What this will involve is no less than the MOACC – the Mother of All Capex Cycles. Over the next 20 years, to move off of fossil fuels, Jonas reckons that as much as $20 to $40 trillion will need to be spent in “accumulated capex and R&D.” So far, only 1% of this amount has gone toward this endeavor while to-date, not even 3% has even been allocated.
“While many investors are still focused on whether GM can outperform Ford by 5 or 10% this year (or vice versa),” Jonas summed up, “the global renewable energy/battery capex cycle is where the real alpha is, in our opinion.”
All in all, there’s no change to Jonas’ rating on TSLA, which remains an Overweight (i.e., Buy). The analyst gives the stock a $1,300 price target, which suggests ~32% growth in the year ahead. (To watch Jonas’s track record, click here)
What does the rest of the Street have in store for Tesla? It’s a mixed bag; based on 15 Buy ratings, 5 Holds and 6 Sells, the stock claims a Moderate Buy consensus rating. The average price target currently stands at $1,005 and change, implying shares will stay rangebound for the foreseeable future. (See Tesla stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
