Tesla (TSLA - Get Report) stock could be poised to rally this week ahead of Friday's Model 3 "Handover Party," Baird analyst Ben Kallo said, according to Bloomberg.

The event is expected to offer more details about the upcoming Model 3 and could serve as a positive catalyst for Tesla stock. Kallo said he sees Model 3 margins ramping faster than both the Model S and the Model X margins did.

Baird suggested investors buy any weakness associated with Tesla's second quarter earnings expected August 2. Long-term prospects continue to breed optimism, Kallo wrote.

Baird reiterated an "outperform" rating for Tesla with a $368 price target, implying an 8% upside for the stock from its Tuesday closing price. Tesla shares traded down 0.7% on Wednesday morning.

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