Please ensure Javascript is enabled for purposes of website accessibility

Why Tesla Stock Jumped on Friday

By Daniel Sparks – Oct 15, 2021 at 5:19PM

Key Points

  • Reiterating his buy rating, Jefferies analyst Philippe Houchois believes there are reasons to be more optimistic about Tesla stock.
  • The company's increased scale could help boost margins in 2022 and 2023.
  • Tesla reports earnings next week.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Legacy automakers can't keep up with the electric-car manufacturer, according to one analyst.

What happened

Shares of electric-car maker Tesla (TSLA 11.00%) moved higher on Friday, climbing more than 3%. Trading at over $843 at market close, the stock is only 6% off its 52-week high.

The growth stock's gain was likely fueled both by an upbeat day in the overall market and an analyst's increased price target for the shares.

A chart showing a stock price rising sharply higher.

Image source: Getty Images.

So what

On Friday, Jefferies analyst Philippe Houchois boosted his price target for Tesla stock from $850 to $950. In addition, he reiterated a buy rating. The price target represents more than 11% upside from where the stock traded at market close on Friday.

The enhanced view for shares reflects a more optimistic forecast for Tesla's earnings before interest and taxes in 2022 and 2023 based on sales momentum and efforts to further scale its manufacturing with new factories.

More importantly, Houchois believes legacy automakers are failing to close the gap on Tesla's lead.

Also likely helping Tesla stock on Friday was an upbeat day for the overall market. The S&P 500 rose 0.75%.

Now what

Investors will get more insight into the company's momentum when it reports its third-quarter results, scheduled for Wednesday, Oct. 20.  With deliveries jumping 73% year over year during the period, the automaker's top- and bottom-line growth will likely be impressive, too.

Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.