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Morgan Stanley On Tesla: 'Major Car Dealers Quietly Supporting Elon Musk'


In a report published Wednesday, Morgan Stanley analysts maintained an Overweight rating on Tesla Motors Inc (NASDAQ: TSLA), with a price target of $280.

Meetings with US auto retailers have indicated that they consider the prospective abolishment of US state dealer franchise laws preventing company-owned stores as welcome and to their advantage.

In the report Morgan Stanley noted, "Virtually every dealer we speak with on this topic believes franchise laws are not needed to prevent OEMs from owning stores. One dealer told us earlier this week: "There's no way auto companies want to get into the downstream sales/service business in any significant way. The franchise model works on its own without laws to enforce it.""

The analysts consider this as important because:

  • "Tesla is the first of many new entrants who will challenge existing laws on US auto retail."
  • The US auto retail segment is currently worth almost $1 trillion and is split among roughly 10,000 firms. Deregulation may trigger consolidation.
  • There is a shift from consumers owning cars to sharing cars. Such mobility models could bypass auto retailing altogether.

"We argue Tesla cannot be valued on near-term multiple metrics like traditional auto companies given that we expect Tesla to multiply revenues by more than 3x from 2014 to 2018, 6x by 2020, and around 18x by 2029," the analysts added.

Latest Ratings for TSLA

Jul 2019ReiteratesUnderweight
Jul 2019MaintainsBuy
Jul 2019MaintainsNeutral

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Posted-In: Morgan StanleyAnalyst Color Reiteration Analyst Ratings


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