Tesla Motors Inc. rose the most in four months after Morgan Stanley boosted its rating on the electric-car maker to overweight, saying concerns that Model S production is increasing too slowly “are overdone.”
The shares climbed 7.1 percent to $32.54 at the close in New York, its biggest daily advance since May 10. Tesla has gained 14 percent this year.
“A new Model S has to be perfect right out of the box,” Adam Jonas, a Morgan Stanley analyst, wrote in a report. “We have urged investors to allow for a slower Model S ramp as Tesla prioritizes perfection over quantity.” Jonas, who raised his rating from underweight, estimated deliveries of 230 of the cars this quarter, 2,000 in the fourth quarter and 15,000 in 2013.
Tesla, based in Palo Alto, California, wants to become profitable from sales of the Model S as early as next year. Chief Executive Officer Elon Musk has said the company has 10,000 orders for the vehicle and will deliver 5,300 this year and 20,000 in 2013. The Model S starts at $57,400.
Jonas raised his price target on Tesla to $50 from $45.