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Morgan Stanley analyst anoints Tesla and its stock

Morgan Stanley analyst sets target price for Tesla Motors shares at $70.

Tesla Motors has yet to build its first car in the United States, but a Wall Street analyst has given the electric car maker's shares the kind of jolt no lithium ion battery could.

In a report on Thursday, March 31, Morgan Stanley analyst Adam Jonas went way out on a limb and called Tesla "America's Fourth Automaker."

Should the Detroit 3 carmakers be quaking in their boots? Maybe not, but Tesla shares shot up about 20 percent, topping $28 a share, after Jonas raised the target price for the shares to $70.

Jonas said vast changes in the car industry, "disruptive technology," and changing consumer tastes have opened the door for new entrants like Tesla. "California Dreaming? We don't think so," he wrote.

Jonas, whose firm was an underwriter of Tesla's 2010 public stock offering, says conditions "are ripe for a shakeup of a century-old industry heavily invested in the status quo of internal combustion. The risks are high. So is the opportunity."

Tesla hopes to launch the Model S in 2012. The EV will be built at the former NUMMI plant in Fremont, Calif., which Tesla bought from Toyota.

Tesla has yet to turn a profit, and Jonas acknowledged it's still a risky investment: "Will Tesla run out of money? We don't think so. But there's also not much room for error."

(Source: Automotive News)