Tesla gets new price target—but with warnings
Tesla received a fresh price target increase from Morgan Stanley on Monday, but the bank’s new analyst is signaling a more cautious outlook for the year ahead. Andrew Percoco, who has taken over Tesla coverage from longtime bull Adam Jonas, raised the firm’s price target from $410 to $425. At the same time, he downgraded the stock’s rating from “Overweight” to “Equal Weight.”
Percoco said Tesla still leads in electric vehicles, manufacturing, renewable energy, and real-world AI, and therefore deserves a premium valuation. However, he warned that expectations are now so high that the stock may face a volatile trading environment over the next 12 months. In his note, he wrote that Tesla shares have moved closer to “fair valuation” and that catalysts in its non-automotive businesses appear largely priced in, News.Az reports, citing foreign media.
He also said that Morgan Stanley would reduce its price target by about seven percent if certain market-cap hurdles are met. One noticeable shift under Percoco’s leadership is how individual Tesla projects will be evaluated going forward. For instance, he estimates that the Optimus humanoid robot contributes roughly $60 per share in equity value.
Percoco described Full Self-Driving as the “crown jewel” of Tesla’s automotive business, calling it a potential game-changer as the company moves toward higher levels of autonomy. He believes Tesla’s progress in hands-off and eventually eyes-off driving could reshape the personal driving experience and maintain a significant competitive edge.
His outlook also includes both bullish and bearish scenarios. In the most optimistic case, he sees Tesla reaching $860 per share within a year if the company successfully navigates the EV market slowdown, expands its robotaxi program, executes unsupervised FSD, and scales Optimus. The bear case is sharply lower at $145, reflecting the possibility of deeper competition, weaker margins, regulatory hurdles for robotaxis, and slower growth in both the automotive and energy divisions.
At the moment, Tesla shares are trading at about $441.
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