Tesla Shares (TSLA) Could Climb to $400 Per Share After Q3 2019, Says Jefferies

Jefferies raised its Tesla (NASDAQ:TSLA) price target to $400 from $300 in a recent note to its clients and reasserted its “Buy” rating for the electric car maker’s stock. TSLA closed at $337.14 on Monday, November 11, up by 2 percent. The Elon Musk-led company’s shares have continued to rise since the Q3 earnings call. Based on the TSLA’s current performance, Jefferies analyst Philippe Houchois has concluded Tesla will likely continue to be profitable in the future. 

Shorts lost billions after the Q3 2019 earning results, forcing some to give-up their TSLA position. Only a few fierce bears remained in the fight. They have questioned if Tesla’s Q3 profitability was sustainable in the long run, making it sound like the company’s recent quarter was some sort of fluke. 

Jefferies analyst Philippe Houchois seems to have answered the shorts’ sustainability question, which is why he raised TSLA’s PT by 15 percent to $400 from the company’s current levels, reported Bloomberg. In a note, Houchois stated that Jefferies expects Tesla to earn more and improve its balance sheet in the future. 

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The Jefferies analyst seems to have concluded that Q3 2019’s earnings have set a foundation for Tesla’s return to growth in 2020. As such, Houchois wrote in his note that Jefferies forecasted Tesla’s gross margins to be 23 percent by 2021, according to Markets Insider. 

Currently, Jefferies holds one of the more optimistic forecasts for TSLA. The company is third only to New Street Research’s Pierre Ferragu and ARK Invest CEO Cathie Wood. Ferragu set a price target of $530 for the all-electric automaker, much higher than Houchois’s $400. Meanwhile, Wood’s forecast blows the other TSLA bull’s predictions out of the water. She predicted Tesla’s stocks could go up as high as $6,000 per share in the long-term. 

It must be noted that Jefferies has been one of the companies that have taken a more neutral stance toward TSLA stock. Its price targets have shifted from $360 to $450 in the past. Jefferies has also changed its ratings from a “Hold” to a “Buy." Given its history, Jefferies has been a mild bull but bases its prediction on sound reason and analysis.