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Tesla Gets a Rally From Morgan Stanley Upgrade and Optimistic Outlook of CEO

Tesla Motors (NASDAQ: TSLA [FREE Stock Trend Analysis]), maker of electric vehicles and electric vehicle components, got a boost in early trading Monday following an upgrade at Morgan Stanley and some encouraging comments from its founder and Chief Executive Officer, Elon Musk.

Morgan Stanley released an encouraging report for Tesla investors Monday morning, upgrading the company’s rating from Underweight to Overweight while increasing its price target from $45 to $50.

The upgrade was justified on the basis that delivery expectations for the highly anticipated Model-S have consistently fallen this year, to at or below what deliveries will actually be. Morgan Stanley went on to say that a 72 percent fall in EPS expectations this year also set the bar low for the cutting edge auto-maker.

In an interview with Liz Claman of Fox Business News, Musk was asked to comment on the large volume of shorts currently placed on his company’s stock. He answered that “I think it’s very unwise to be shorting Tesla. I think there’s a tsunami of hurt coming for those holding a short position, and it’s going to be very unpleasant. I advise people to exit while there is time.”

Musk and his company have faced other difficult questions from investors, many centering around why Tesla can succeed where the big three – General Motors (NYSE: GM), Ford (NYSE: F) and Chrysler (OTC: FIATY) have failed. When Fox’s Claman posed this question to Musk in their interview, he responded confidently that his company “will never make a bad product”, saying that Tesla will not be focused on “cutting pennies”, but on developing compelling and innovative product offerings.

This product-centric focus, a common theme in silicon valley giants such as Google (NASDAQ: GOOG) and Facebook (NASDAQ: FB) is also a focus in Morgan Stanley’s report, and a source of significant confidence. This high tech approach, and its application to a recently non-innovative industry is one of the reasons Tesla has caught investors’ interest.
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