Legacy automakers have joined the push for an electric vehicle future, but that doesn't take away from the bull case for Tesla 's stock, according to investment firm Jefferies. Analyst Philippe Houchois upgraded the stock to buy from hold, saying in a note to clients on Monday that Tesla was "leading the way on earnings momentum and capital allocation." "Tesla is still leading innovation - Legacy [original equipment manufacturers] progress on EV powertrain and line-ups, but Tesla continues to build or maintain multiple edges, notably in product complexity, inventories, direct selling and initiatives in selling subscription services," the note said. The stock has struggled this year, with legacy automakers seeing big jumps for their share prices as they role out their electric vehicle plans and lineups. Jefferies described this as a "healthy" correction and that the growing market for clean energy vehicles should be a positive for Elon Musk's automaker. Tesla sales numbers from China have disappointed some analysts in recent quarters , but that has not translated into a global demand hit for the brand, Jefferies said. "Despite temporary concerns about demand weakness in China, Tesla has been capacity constrained globally, with brand sales still dominating the chart and the company able to shift shipments to Europe when China turned temporarily weaker," the note said. Jefferies hiked its price target on Tesla to $850 per share from $700. The new target is roughly 22% above where the stock closed on Friday. The shares are little changed so far in 2021 amid volatile moves. -CNBC's Michael Bloom contributed to this report.
Michele Tantussi | Reuters
Legacy automakers have joined the push for an electric vehicle future, but that doesn't take away from the bull case for Tesla's stock, according to investment firm Jefferies.