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“While we hold an Underperform rating on Tesla, we nevertheless believe it’s important to give Tesla its credit where due,” Credit Suisse analyst Dan Levy wrote in a note to investors on Monday. “We believe Tesla is leading in the areas that will likely define the future of carmaking – software and electrification.”
Tesla shares rose 5.7% in trading.
The firm has a notably pessimistic view of Musk’s company, with a $200 price target that represents the expectation that Tesla’s stock will drop 44% from its current price of nearly $360 a share. While Credit Suisse did not budge its rating or price target, Levy said he and his team visited Tesla’s Gigafactory 1 in Nevada and came away impressed by Tesla’s battery strategy.
“Tesla is likely ahead of others on batteries – the core of the electric powertrain,” Levy said.
Next year Tesla is expected to host “Powertrain Day,” which Levy expects will shed light on Tesla’s battery strategy – including increasing production, decreasing cost and improving each battery’s efficiency.
“We expect Tesla to highlight why its work in battery gives it a clear competitive advantage vs. other automakers,” Levy said.
– CNBC’s Michael Bloom contributed to this report.