Tesla rises after Morgan Stanley finally upgrades to buy, says company on verge of 'profound' shift

Elon Musk
Joe Skipper | Reuters

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Morgan Stanley's widely followed auto analyst Adam Jonas upgraded Tesla to a buy-equivalent overweight rating Wednesday after remaining on the sidelines for the stock's 500% surge in the last 12 months.

Jonas raised his price target to $540 from $360. The new target represents a 22% gain from Tuesday's close. The stock jumped 8% on Tuesday after finally getting the nod to join the S&P 500. It was up 2.2% to $451.80 a share in early trading Wednesday following the Morgan Stanley call.

Here's how Jonas explained his change of heart: