TLDR
- Morgan Stanley cut Tesla to Equal Weight from Overweight with $425 price target, suggesting 6.5% downside potential
- Andrew Percoco replaces veteran analyst Adam Jonas as Morgan Stanley’s primary Tesla coverage analyst
- Vehicle business valuation reduced to $55 per share with 2026 delivery forecast at 1.6 million units
- Software and network services segment valued at $145 per share on stronger FSD adoption expectations
- Robotics division assigned $60 per share value with 50% probability discount for execution uncertainty
Andrew Percoco made his mark fast. The new Morgan Stanley Tesla analyst downgraded the stock in his debut call.
Tesla drops to Equal Weight from Overweight. The $425 price target points to 6.5% downside from here.
Percoco steps into big shoes. He replaces Adam Jonas, who shifts focus to AI research at the bank.
The downgrade centers on price. Morgan Stanley believes Tesla’s future growth is already reflected in today’s valuation.
“We wait for a better entry,” Percoco wrote. The team forecasts rough trading for the coming year.
Vehicle Sales Projections Take Hit
The core auto business bore the brunt of cuts. Morgan Stanley now values it at just $55 per share.
Delivery expectations fell across the timeline through 2040. The 2026 forecast stands at 1.6 million vehicles.
EV adoption is slowing while competition heats up. Tesla should still grab more U.S. market share as rivals struggle.
That growth isn’t enough to support current prices though. Morgan Stanley flags risk to consensus estimates.
The firm sees a tougher environment ahead. Volume gains won’t translate to valuation gains.
Software Business Carries Premium Value
Full Self Driving technology stands out as a winner. Morgan Stanley tags it as “the crown jewel” of Tesla’s operations.
Network services command a $145 per share valuation. That number actually rose in the refresh.
FSD attachment rates should climb over time. Revenue per user grows across the entire software platform.
Robotaxi projections increased for near-term deployment. Regulatory approval and scale remain question marks.
Morgan Stanley stays cautiously optimistic on autonomous driving. The tech works but timelines stay fuzzy.
Robotics Carries Heavy Discount
The Optimus humanoid project gets a $60 per share value. But Morgan Stanley cuts that in half for probability.
Tesla’s AI foundation and production expertise back the opportunity. Execution risk remains high though.
Morgan Stanley lifted its price target from $410 to $425 even with the downgrade. Changes across vehicles, robotaxis, software and robots drove the adjustment.
The bull scenario hits $860 per share for 89% upside. The bear case drops to $145 for 70% downside.
Tesla dominates EVs, energy storage and practical AI applications. The company sets up to lead autonomous transport, clean energy and robotics.
Dominance doesn’t equal bargain prices. Morgan Stanley sees future wins already counted in the stock.
The analysts expect turbulent trading as expectations meet reality. Estimate risk tilts to the downside near term.
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