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Tesla Rally Picks Up as Jefferies New Target Implies 15% Gain

Esha Dey

(Bloomberg) -- Tesla Inc. traded near this year’s high on Monday, with the electric carmaker’s post-earnings rally gaining momentum after Jefferies analyst Philippe Houchois set a price target that forecasts an additional 15% increase.

The shares jumped as much as 3.6% to $349.19, touching the highest since Jan. 17. Houchois boosted his price target to $400 from $300, saying the company’s growth outlook is “clearing again.” That makes him the most optimistic after New Street Research’s Pierre Ferragu, who sees the stock climbing to $530, according to data compiled by Bloomberg. On average, analysts expect Tesla to fall to $273.

Tesla’s third-quarter gross margin levels were consistent with sustained profitability, and “average selling prices should stabilize ahead of second-half 2020 improvements,” Houchois wrote in a note. The company’s growth outlook is clearing given growing credibility in its product cadence and deeper investment and integration of battery technology, the analyst said.

Read more: Tesla PT Raised by 33% at Jefferies as Risk Profile Improving

Tesla also unveiled its first vehicles built in China, as the company prepares to start sales of domestically made electric sedans in the world’s largest auto market.

​Shares have gained 36% since Tesla’s third-quarter earnings release last month, after the company reported a surprise profit and said it was “highly confident” of reaching the lower end of its prior annual delivery forecast of 360,000 to 400,000 units. While regulatory filings later revealed that revenue in the U.S., its largest market, dropped almost 40% during the quarter, the market has largely shrugged it off.

On Oct. 24, Tesla shares topped the average Wall Street price target for the first time since January, a gap that has since widened further.

As the chart above shows, the spread between average analysts’ price target and Tesla’s share price turned negative in late October, as the price exceeded the average target, and the difference has been growing since then.

To contact the reporter on this story: Esha Dey in New York at edey@bloomberg.net

To contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, Richard Richtmyer, Tatiana Darie

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