Tesla (NASDAQ: TSLA) has received both an increased price target and an improved rating on its stock from Morgan Stanley after reports of the electric automaker enhancing its battery business.
Morgan Stanley’s Adam Jonas increased his price target for TSLA stock by $310, to $1,360 from $1,050, and upgraded his rating for the electric automaker from “Underweight” to “Equal-Weight.”
“Based on the body of evidence collected and research conducted by our tech colleagues, we now give Tesla credit for a third party battery/EV powertrain supply business in our base case (previously in our bull case scenario) that is worth $310 per share,” Jonas said in a note to investors.
Tesla shares are trading around 3.5% above the closing price on Thursday of $1,621. Shares are trading at $1,679 at the time of writing in pre-market trading.
Tesla’s battery developments have been vital to the company’s notoriety as the most dominant automaker in the electric car industry. The cells the company uses, with the help of Panasonic, are industry-leading and have contributed to Tesla’s world-class range and performance standards for its vehicles.
However, the electric automaker based out of Silicon Valley, California, has continued to make improvements to its cells to maintain its dominance over competitors and offer consumers a high-quality battery that will perform accordingly. Tesla continues to develop its battery tech with the help of a team of researchers led by Jeff Dahn at Dalhousie Univerity in Canada.
But next month, on September 22, Tesla will hold “Battery Day,” which will reveal several new developments that the company has come across in its cell research efforts.
Jonas believes that Battery Day could be yet another revolutionary moment in the short, but rich history that Tesla has.
“The Tesla Battery Day…could be a game changer, and based on what we know so far, there is growing risk of Tesla becoming a new battery competitor armed with superior technology,” Jonas said in the note, which was shared by TheStreet.
This week, Teslarati reported that Dahn and his team of researchers had released a new paper that showed a new electrolyte solution could combat battery degradation. It would also encourage higher energy density in battery cells, which means more range, and could help the batteries hold a longer lifespan.
Tesla has also made some moves to its stock this week. The company announced its intentions to perform a 5:1 split in late August, which will increase the number of shares but reduce the price per share by 80%. This move will encourage younger investors to consider putting money into Tesla’s mission.
TSLA shares are up over 300% this year so far, which has contributed to the company earning the title of the most valuable carmaker in the world.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.