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Tesla shares jump after Morgan Stanley raises price forecast

Key Points
  • Morgan Stanley's Adam Jonas raises his 12-month price target on Tesla to $379 from $317.
  • Jonas is one of the most widely-followed Tesla analysts on Wall Street.
  • The stock closed Monday at $342.94, up 60 percent for the year.
Tesla Motors CEO Elon Musk
Brian Snyder | Reuters

Shares of Tesla jumped Tuesday after Morgan Stanley's Adam Jonas, a widely-followed analyst on Wall Street, raised his 12-month price forecast on the electric vehicle maker.

General Motors recently announced plans to roll out a line of 20 all-electric vehicles over the next six years. Ambitious plans like these from traditional automakers have raised fears about more competition ahead for Elon Musk's company, but Jonas said Tesla's existing infrastructure "footprint" will be a "key differentiator" over the coming years, further boosting the stock.

"Infrastructure (of lack thereof) is the 'elephant in the room' of the EV revolution," wrote Jonas in a note late Monday. "Compared to other OEMs (Original Equipment Manufacturer), Tesla has made the biggest proprietary investment in superchargers and destination chargers globally. In most communities, we believe this infrastructure is larger than it needs to be in preparation for the expansion of the serviceable and charge-thirsty fleet. Other OEMs will closely watch how consumers react to this infrastructure."

Tesla shares rose 1.4 percent in premarket trade Tuesday morning after the call. Jonas and his colleagues raised their price target on Tesla to $379 from $317, representing 11 percent upside from Monday's close.

The shares came under pressure the last two days on concerns about the company's ability to produce its new Model 3 fast enough to satisfy Wall Street.

The analyst estimates that Tesla has already invested over $8 billion to infrastructure spending, constructing hundreds of service centers, stores and galleries, and the world's largest battery factory.

Last week, Jonas appeared on CNBC's "Power Lunch, " where he highlighted how disruptive he views Tesla.

"I would describe the current environment for autos as a magical, magical time," Jonas said last Wednesday. The analyst told CNBC that traditional carmakers are reviewing their business models as tech-heavy firms focusing on areas such as artificial intelligence and supercomputing.