Morgan Stanley has raised $Tesla (TSLA.US)$'s rating from Equal Weight to Overweight, with the price target increasing from $250 to $400.
The analyst regards Tesla as both an automotive and technology company but anticipates that software and service revenues will be the main value drivers moving forward. Similar factors contributing to $Amazon (AMZN.US)$ Web Services accounting for 70% of Amazon's total EBIT are expected to work in Tesla's favor, "opening up new addressable markets that extend well beyond selling vehicles at a fixed price," according to the analyst's research note to investors.
Morgan Stanley believes Dojo, Tesla's custom supercomputing initiative in development for the last five years, is the impetus behind this prediction. The firm anticipates that Dojo may add up to $500B to Tesla's enterprise value by hastening the adoption rate of mobility and network services. This drives the price target adjustment, the upgrade, and Tesla's ascension as the analyst's top pick, replacing Ferrari (RACE).
