Tesla will spike another 20% as it extends its lead against rival automakers, Jefferies says

• Tesla is rapidly extending its lead over legacy automakers, and its dominance will drive shares 20% higher over the next year, Jefferies analysts wrote on Thursday.
• The firm lifted its price target to $1,200 from $650, citing positive developments in the automaker's battery technology, vehicle range, and business model.
• The coronavirus pandemic will serve "as an accelerator of the transition to EV and renewables," the team led by Philippe Houchois wrote.
• An upside scenario fueled by a major battery breakthrough could send shares as high as $1,400 by June 2021, Jefferies added.
• Watch Tesla trade live here.

The widening gap between Tesla and legacy automakers can push the electric-car giant's stock to records and beyond over the next year, Jefferies analysts wrote on Thursday.

In a note to clients, the firm upgraded its Tesla target price to $1,200 from $650, reflecting a 20% leap from Wednesday's closing level. Jefferies cited leads in battery technology, vehicle range, and business model for the bullish outlook, adding that the coronavirus pandemic would further boost Tesla's expansion.

"We see COVID-19 as an accelerator of the transition to EV and renewables, from consumers and public policy," the team led by Philippe Houchois wrote. "Tesla remains significantly ahead of peers in product range, capacity, and technology."

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The analysts maintained their "buy" rating for the stock. Tesla traded at $1,004.29 per share as of 10:36 a.m. ET on Thursday.

Though competitors are bringing a slew of electric vehicles to market, Tesla remains in front of the pack with its new Model Y SUV, Jefferies said, adding that the company could extend its lead at the end of next year, when it's expected to bring its Cybertruck to market.

Tesla is also surging forward with its battery technology. The analysts said they expected the automaker to deepen its vertical integration to reduce its production's environmental impact and prepare for increased supply. Such developments would also streamline the company's business model by aiding distribution efforts and shortening the path to product rollout, the team said.

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Jefferies' upside scenario sees shares skyrocketing as high as $1,400 on an even larger breakthrough in battery costs and efficiency. Tesla delayed its "Battery Day" event in May and is expected to reschedule this month. Analysts have speculated that the automaker could debut a battery designed to last up to 1 million miles — something that would have "profound implications" for vehicle design, recycling requirements, and emissions, Jefferies said.

On the other end of the spectrum, the analysts' bearish scenario involves coronavirus-related production delays that would drag profits lower through 2021; the firm projected that shares would slide to $800 over the next 12 months. Still, Jefferies said it expected "solid downside protection" from acquisition interest within and outside the automotive industry.

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