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Tesla Jumps Following Another Price Target Boost

Tesla shares surge back to near-record highs on yet another price target increase, this time based not only on potential car sales but also on energy generation and storage.

Shares of Tesla  (TSLA) - Get Tesla Inc Report leaped higher on Wednesday, climbing back to near-record highs, fueled by yet another analyst upgrade, this time from Piper Sandlers Cos., who expects the electric vehicle company to not only keep making money on battery-powered cars but also on energy generation and storage to run them.

Shares of Tesla gained more than 8% in morning trading, pushing them ahead of their most recent record closing price of $887.06 reached on Feb. 4, after Piper Sandler analysts Alexander Potter and Winnie Dong raised their one-year price target on the stock by almost $200 - to $928 a share from $729. 

However, while other Wall Street analysts have lifted their price-targets and in some cases calls on Tesla shares, Potter and Dong pointed to different reasons behind their expectations that Tesla shares have more gas: the company's potential success in solar energy generation and power storage - something the duo tried out first-hand.

In a research note to clients, Potter and Dong pointed to their own experience of recently installing a solar-based system to use for charging a Model X, calling the results to date “illuminating.”

“It’s easy to forget that TSLA sells batteries and solar power products; after all, the segment was only 6% of sales in 2019,” analysts Potter and Dong wrote in their note. “But management says that the solar+storage business will one day rival the automotive segment, and if this is true, then investors will eventually need to pay attention.”

To be sure, the Piper Sandlers analysts are near the front of the proverbial pack in their expectations of Tesla’s potential. The brokerage firm in January increased its Tesla price target twice on expectations of strong potential growth in China - despite near-term coronavirus concerns.

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"If Tesla's Model 3 market share in the United States can be replicated in China - and if this logic extends also to Model Y - then Tesla's annual volume in China alone would eventually exceed 650k units," Potter wrote at the time.

Tesla started delivering its China-built Model 3 sedans to local customers last month, a year after its first factory outside the U.S. broke ground. Last year, Tesla delivered 367,500 vehicles globally.

Shares of Tesla ended the trading day on Tuesday up 7.3% at $858.40 after analysts at both Morgan Stanley and Sanford Bernstein boosted their own respective stock-price targets. 

Morgan Stanley analyst Adam Jonas on Tuesday raised his one-year price target to $1,200, up from the firm’s previous view of $650 a share and about 50% higher than the company’s closing price on Friday of just above $800. 

Jonas's price target would give Tesla a market cap of $220 billion.

Tesla stock was up 8.69%, or $74.60 a share, at $933 in morning trading on Wednesday. Its 52-week intraday trading high is $968.99.