When it comes to the race for self-driving vehicles, Alphabet Inc. (GOOGL) isn’t getting enough love from Wall Street, prompting Morgan Stanley to raise its price target on the stock.

In a research report covered by CNBC, Morgan Stanley analyst Brian Nowak said Alphabet’s Waymo self-driving-car unit is in the lead when it comes to developing fully autonomous vehicles, but investors and analysts haven't factored that into their assumptions. As a result, Nowak raised its price target on Alphabet to $1,515. With the shares currently trading at $1,247.49, Morgan Stanley expects shares to gain an additional 20% or more. Morgan Stanley now has the highest price target on Alphabet of all the Wall Street analysts that cover it. (See also: Google's Waymo Poaches Tesla's Safety Head.)

Waymo to Boost Alphabet’s Prospects Big Time

"We see the launch of Waymo's ride-hailing service by year-end as a potential catalyst for value realization," wrote Nowak​​​​​​ in the research note, reported CNBC. "We believe current Alphabet valuation ascribes little value for Waymo, implying it is still a call option."

Currently, Morgan Stanley values the self-driving unit at $45 billion but said the business could be worth $175 billion as it moves into ride-sharing, logistics and licensing. The analyst did note that Waymo has some obstacles it needs to overcome, including legislation focused on self-driving vehicles, expansion into new cities and boosting the adoption rate in the market. CNBC pointed to a report in The Information saying that Waymo is facing backlash from residents in a Phoenix suburb where it is testing its cars. The complaints, according to CNBC, are due to frustrations with the sudden stops and delays in turning.

"As Waymo grows, we see investors putting a higher success likelihood and value on the asset," wrote Morgan Stanley’s Nowak. "Every 10 percent realization of our total potential Waymo value translates to about $25 per share." (See also: Alphabet’s Self-Driving Car May Boost Stock 25%.)

Waymo Sets Its Sights in China

The call out of Morgan Stanley comes as Waymo is entering the Chinese market, gearing up to open an office in Shanghai at the same time Google is mulling the launch of a new search engine for the country. Citing a filing with China’s National Enterprise Credit Information Publicity System, The Wall Street Journal reported the new Waymo unit, which registered $508,000 in capital, will develop and test self-driving vehicles and parts. The unit could also provide consulting on supply chain management and logistics, reported the WSJ, citing the filing. Waymo is listed as the only shareholder in the Chinese unit with Kevin Vosen, the general counsel at Waymo, named as the chair. Chief Executive John Krafcik and other Waymo executives were also named as representatives of the new unit.