Morgan Stanley automotive analyst Adam Jonas thinks Tesla’s efforts to cut costs has trimmed some of the risk away from the electric vehicle stock.
As a result, Jonas listed Tesla as a top pick in the firm’s U.S. Autos segment, which was previously occupied by Ford.
Jonas maintained an overweight rating on Tesla stock with a $310 price target, implying more than 41% upside from Friday’s $219.80 close.
Tesla shares gained 6% in morning trading.
“The over $0.6bn of restructuring charges recognized by Tesla in the quarter, combined with other actions, has helped lower the breakeven point to levels where Tesla can still generate positive cash flow at an enterprise level, even with EV capacity utilization at 69% last quarter,” Jonas said.
“While Tesla is still making cars, we note the company is aggressively redeploying incremental resources, technology, people and capital away from the auto side of the house,” the analyst added.
Tesla has slipped nearly 12% in 2024. Shares of the EV firm posted their worst drop since 2020 following disappointing second-quarter results last week.