Tesla (TSLA) is one of very few companies that have managed to yield solid positive returns in the fourth quarter so far. Last week, Tesla stock inched up 2.1%, versus the 4.6% value erosion in the S&P 500 Index. As of December 7, Tesla has yielded 35.2% positive returns quarter-to-date. Other auto stocks (XLY) General Motors (GM), Ford (F), NIO (NIO), and Fiat Chrysler (FCAU) are up 3.0%, down 4.6%, up 0.1%, and down 12.4% in the fourth quarter so far. Let’s see where Tesla stock might be headed this time.
On December 7, Jefferies upgraded its “hold” rating on Tesla to “buy,” according to a CNBC report. Jefferies also raised its target price for Tesla stock to $450 from $360. According to CNBC, Jefferies analyst Philippe Houchois said, “Tesla should continue to stand out with broader price points, battery security of supply, product edge and a brand that transcends the volume/premium divide.” The upgrade and Houchois’s positive outlook on Tesla boosted investors’ confidence.
Tesla reached a milestone by achieving profitability in the third quarter—much earlier than most analysts had expected. Its car production rate and deliveries have also seen exponential growth over the last couple of quarters.
The company is also speeding up its plans to build a Shanghai-based gigafactory in China, which could help it save on the steep tariffs China charges on cars imported from the United States. Currently, Tesla pays a huge 40% import duty in China.
All these positive developments are helping Tesla stock remain positive in the fourth quarter. In December, investors’ high expectations for the company’s fourth-quarter results could help the stock approach Jefferies’ $450 target price. -
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