11:13 AM EDT, 07/29/2024 (MT Newswires) -- Tesla (TSLA) has been named the "top pick" in US autos, replacing Ford Motor ( F ) , on the back of more managed expectations on autos and emerging drivers of firm value, Morgan Stanley said in a note.

"Cost cutting/restructuring has stemmed the downside risk to the EV business," the report said.

Restructuring charges in Q2 and other actions 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, it 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 report said.

Morgan Stanley also expects the long-term trend for China exposure to continue to fall systematically while projecting increased contribution from recurring services revenue. It also pointed to Tesla's strong position in fast growing energy storage portfolio.

Morgan Stanley has an overweight rating on Tesla with a price target of $310.

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