Morgan Stanley analyst Adam Jonas upgraded Tesla to Overweight from Equal Weight with a price target of $540, up from $360. The stock closed Tuesday up $33.52, or 8%, to $441.61. Tesla is “on the verge of a profound model shift” from selling cars to generating high margin, recurring software and services revenue, Jonas tells investors in a research note. The analyst views the car business as the “entry ticket” for Tesla to “unlocking much larger” total addressable markets. For the first time, Jonas added software/connected vehicle services revenue to his earnings forecast and base case valuation. With the company’s global car population set to rise from 1.3M units in 2020 to 2.1M next year, ,a more in-depth understanding of the revenue streams derived from each car is warranted right now, says the analyst.
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