Morgan Stanley analyst Jonas says investors may have missed their window to buy Tesla shares

Published Fri, Feb 10 202310:01 AM EST

Notable electric vehicle analyst Adam Jonas believes investors may have missed their chance to buy Tesla on the cheap after the stock doubled off its 52-week low, with most of the comeback coming this year. "While we reiterate the overweight rating on Tesla shares, we believe the window of opportunity on 'valuation' has closed," the Morgan Stanley analyst wrote in a note Thursday. "Further upside from here will require a more substantial narrative change following the March 1st Investor Day." Shares of Elon Musk's auto company are up 103% from their 52-week low and 68% this year as a break in rapidly rising interest rates encouraged investors to take more risk in tech stocks again. China reopening from Covid restrictions has also helped boost the shares. TSLA YTD mountain Tesla so far in 2023 Jonas noted that the shares now trade for 38 times enterprise value/EBITDA. Not too long ago, the shares were trading at just a 20 price-earnings multiple based on 2025 earnings estimates, the analyst said. "Adding over $350bn of market cap this year closed the 'valuation case' window on Tesla even faster than it opened," Jonas wrote. Morgan Stanley's price target is $220, just 6% above Thursday's close. Jonas is not alone on Wall Street in being cautious on Tesla after the big runup in the stock. The consensus price target of all analysts is about $193, representing a 7% decline from here, according to Refinitiv. Tesla's investor day on March 1 will take place at its Gigafactory in Texas, where it will reveal its "most advanced production line as well as discuss long term expansion plans, generation 3 platform, capital allocation and other subjects," the company says on its website . "We're excited to see progress on the manufacturing side including giga-press (front and rear), 4680 battery pack, structural pack and other innovations (including in supply chain, up-stream material sourcing and mining)," wrote Jonas. Still, the analyst worries that macroeconomic conditions may override any positive company developments. A growth stock like Tesla, which trades on the promise of big earnings growth to be delivered in the future, can be punished more than other stocks if inflation surges and rates start rising again. "Will the rally continue or could a 'hot' CPI print bring the shares down to earth?," Jonas asked. The latest consumer price index for January is due next Tuesday and economists expect inflation to have declined from the prior month. —With reporting by Michael Bloom .