Morgan Stanley Is Bullish on Tesla for First Time Since 2017.

Morgan Stanley Tesla

Morgan Stanley gave Tesla Inc. an overweight rating for the first time in more than three years, predicting that Elon Musk’s firm is on the verge of a “profound model shift” from selling cars to generating high-margin software and services revenue.

“To only value Tesla on car sales alone ignores the multiple businesses embedded within the company,” analyst Adam Jonas wrote in a note as he upgraded the shares from equal-weight and raised his price target by 50% to $540, suggesting 22% upside for a stock that’s quintupled this year.

Jonas’s valuation now includes Tesla’s network services, energy storage and insurance businesses. The internet-of-cars opportunity is also real, and a prerequisite to unlock further gains for the stock, the analyst wrote.

Tesla shares extended their surge on Wednesday, rising 2.7% in premarket trading to $453.56. The stock jumped 8.2% Tuesday after it was selected for admission to the S&P 500 Index.

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