Shares of Tesla Inc. TSLA, +6.41% are up 1.1% in premarket trading Wednesday after Jefferies analyst Philippe Houchois raised his price target on the stock to $2,500 from $1,200, with the new target representing the highest listed on FactSet.
“Tesla’s competitive edge in cars may soon start to shrink but continues to widen in multiple other dimensions, from brand leverage and software to battery capacity and industrial efficiency,”
Houchois wrote in a note to clients. He’s also looking ahead to the company’s Battery Day on Sept. 22, when he expects that Tesla will “set new benchmarks and ambitions for battery density, materials and industrial processes leading to pack costs <$100 in coming years.” He’ll be looking for information about how Tesla plans to conduct vertical integration, especially in its storage and solar businesses, and what impact that will have on capital expenditure costs.
He’ll also be looking for commentary on the “million-mile” battery, or the idea of a battery that could last for a million miles. “We cannot pretend to understand the magnitude and speed of share price moves,” Houchois wrote of Tesla shares, which have rallied 147% over the past three months as the S&P 500 SPX, +1.02% has risen 15%.
But he said that he and his team “still see logic in the exuberance,” in part because “growth expectations for 2020 to 2022 doubled since September 2019, almost exclusively driven by autos as non-auto related revenue remains a small fraction of estimates.” Houchois said that his price target amounts to $500 on a split-adjusted basis, as Tesla will be conducting a five-for-one stock split after the close of trading Friday.