Tesla-CATL partnership could be a 'game-changer': Morgan Stanley

Tesla (TSLA) has lagged behind its "Magnificent 7" partners, earning mixed messages this week from financial firms. Morgan Stanley held its Overweight rating on Tesla, keeping its price target at $230 per share, but calls its partnership with Chinese EV battery maker CATL a 'game changer' for the industry in terms of supply and pricing. Meanwhile, an analyst at Citi has cut his price target for the company from $224 to $196.

Yahoo Finance Anchors Jared Blikre and Josh Lipton break down the latest developments for the company, from pricing to supply.

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Editor's note: This article was written by Nicholas Jacobino

Video transcript

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JOSH LIPTON: Time now for Call of the Day. And it's been a bumpy road for Tesla as Wall Street sends mixed messages on the stock. Morgan Stanley saying, when it comes to EVs, we're about to have a power couple on our hands as it partners with CATL battery company, saying the pairing could be a game changer for the industry in terms of supply and pricing. But as Tesla nears its next delivery report, Citi has cut estimates, in fact, citing a challenging market and disappointing data this month.

So lots of negativity around Tesla, Jared. We know that's been kind of the theme. So how about some positivity? Should we try that?

JARED BLIKRE: Yeah, let's look at that.

JOSH LIPTON: That's why I like this note from Canaccord Genuity, the team over there. They, kind of, weighed in, Jared. They said, you know what, they told their clients, we've crunched the numbers, it's not that bad.

They say in their opinion not that bad. They say, listen, obviously, the sentiment is just extremely negative. But they dig into those first quarter deliveries, we have come in, Jared, and say, you know what, the issues are mostly supply related, in fact.

JARED BLIKRE: Yes.

JOSH LIPTON: And that means, they argue, people could be, in fact, misdiagnosing current Tesla fundamentals.

JARED BLIKRE: Right, because the China problem has been a demand one or at least so we think, in that they shut down their economy. It just didn't reopen as quickly as everybody thought. But if this is the case, then, well, there's some upside to Tesla.

What I like about this, and I'm going to-- let's go to the Wi-Fi interactive where I can chart the price action. You mentioned sentiment. So the stock has been doing terribly compared to its mega cap and Mag Seven peers here. This is over the last year.

But let's go to the last five years, what emerges here, just on a technical level, $150 is a really important level. To the upside, we have $300 and then we have the all-time high in the $400s. But basically, $150 to $300 is a huge area.

And when we get down to the bottom and sentiment is very negative, that creates a potential for a rise. And then we could see a rally to 300. And if you're just following the logic here, that might mean nothing.

We could go sideways forever. We don't have to break out, but that's just the way I happen to be seeing this particular stock right now. And if you have anything else on Tesla?

JOSH LIPTON: Yeah, well, one other thing that I thought was interesting was the team at Canaccord Genuity talking about pricing as well. And obviously, we know, like, listen, Musk was cutting, cutting, cutting. Now they say pricing is in a better place.

The question they ask is could margins actually help set the stage for positive earnings revisions as that Cybertruck now ramps? Listen, we don't know. We're going to see, but bottom line thereby targets $234.