Morgan Stanley gave Tesla Inc. an overweight rating for the first time in more than three years, predicting that Elon Musk’s firm is on the verge of a “profound model shift” from selling cars to generating high-margin software and services revenue.

“To only value Tesla on car sales alone ignores the multiple businesses embedded within the company,” analyst Adam Jonas wrote in a note as he upgraded the shares from equal-weight and raised his price target by 50% to $540, suggesting 22% upside for a stock that’s quintupled this year.

Jonas’ valuation now includes Tesla’s network services, energy storage and insurance businesses. The internet-of-cars opportunity is also real, and a prerequisite to unlock further gains for the stock, the analyst wrote.

Tesla shares (TSLA) extended their surge on Wednesday, rising 2.7% in premarket trading to $453.56. The stock jumped 8.2% Tuesday after it was selected for admission to the S&P 500 Index.