(Updated - November 11, 2019 8:22 AM EST)

Jefferies analyst Philippe Houchois raised the price target on Tesla (NASDAQ: TSLA) to $400.00 (from $300.00) while maintaining a Buy rating.

The analyst comments "Without assuming it is smooth sailing from here, Q3 reported gross margin levels that are consistent with sustained profitability while ASPs should stabilize ahead of H2 2020 improvements. Stabilization in 2019 sets a better foundation for a return to growth in 2020 revenue and earnings. We continue to see Tesla maintaining its edge in product, affordability and technology."

Near-term the firm is cautious about Q4 results but sees an improved foundation for growth in 2020. "Into Q4 we should still be concerned about delivery seasonality (early October data suggests another quarter of back-end loaded deliveries) and risks inherent in ramping up the new plant in China," Houchois commented.

The firm raised 2020 EBIT 24% to $1.16 billion, which they say is still conservative considering that credit income including FCA could approach $1 billion.