Tesla Shares Soared Followed By Analyst Bullish Stance

After closely monitoring the stock, the analyst believes that the stock has the potential to go up

Over the past, the stock of the automaker giant had slumped. However, most recently the shares had gain a subtle momentum which has led an analyst to think that from now on, the shares will accelerate.

After the Wisconsin based investment banking institution Baird’s analyst Ben Kallo elevated his rating on Tesla’s stock from “neutral” to “outperform,” the shares of the luxury electric car maker went up by 2.2% at the market operating on Monday and stood at $212.03. Moreover, the analyst also upgraded the price target to $300 –earlier the price target set on the stock was $230. Furthermore, the new price target set is almost 41% above to what the shares have currently been traded at.

In a note to clients forwarded by Mr. Kallo on Monday, the analyst expressed that although the analysts were skeptical when the slow production of Model X deliveries slumped down its delivery rate. However, the most recent data stipulates that the production of the prestigious vehicle is indeed going up which is more likely to drive the “deliveries and margin expansion throughout 2016.” He added further, “Additionally, we believe [Tesla] is ahead of expectations on reducing battery costs, and continues to have a significant lead on competing [electric vehicles].”

In the last five weeks, the Palo Alto, Calif. firm’s shares went up around 50%, and this is why Mr. Kallo upgraded his initial ratings of the stock. Back in the second week of February, just before the automaker unveiled its fourth quarter earnings, the shares of the company had hit the bottom.

Although the stock has climbed up the ladder however the pessimist of the investors is not going away easily. Both the investors and the analysts are apprehensive regarding the company’s cash burn, the impending production delays of Model X, and the potential further delivery disruption. According to data provider Markit, around 26% of Tesla outstanding shares were on loan, as of the Friday’s close. Moreover, by the end of February the record had shown that around 27% of the outstanding shares were on loan.

Mr. Kallo expressed: “High short interest sets up [the] stock for potential catalysts of [Model 3] introduction and [first quarter] deliveries announcement.”

By the end of the current month, the luxury electric maker is all set to debut its highly anticipated and moderately affordable newest electric vehicle; Model 3. It is still too soon to predict whether the launch of the new car will turn out to be the positive catalyst for the electric car maker however Mr. Kallo envisions that the initial reservations are most likely to exceed the expectations which collaterally be positive for the shares.

Moreover, most recently, the unofficial sources had proposed that the automaker giant has been increasing the price of its most popular Mode S sedan. That move is likely to help the company in coherently maintaining its free cash flow position too and subsequently halt the slumping of the shares.

Although, the Californian tech titan’s shares have regained a decent amount of momentum which had helped it to cover up its losses however, the analysts are not unanimously bullish on the stock.