Piper Sandler analyst Alex Potter today raised his price target on TSLA stock by nearly 150% from $939 to $2,322 per share.

"In our view, Tesla is the most consequential company in the mobility ecosystem, and this is unlikely to change in the next decade. We are increasing our price target to $2,322 after adjusting our DCF model to reflect faster-than-expected share gains and, more importantly, a detailed analysis of Tesla's software opportunity." - Alex Potter

Piper Sandler increased their forecast for 2020 deliveries to 487,000 and said that Tesla achieving their original guidance of 500,000+ deliveries for the year "might still be in play" despite the impacts of COVID-19.

Alex Potter has been a guest on Tesla Daily in the past, and has been bullish on the stock for quite some time. After Q1 results, Potter noted that Tesla was their top stock choice.

"TSLA is still the top pick in our coverage following a stronger-than-expected performance in Q1." - Alex Potter

In particular, Potter seems more willing than other analysts to take a long-term view in his model, forecasting 3.95M deliveries for Tesla in 2025. Potter took note of Elon Musk's response to the Tesla Daily question on Tesla's Q1 earnings call regarding the company's compound annual growth rate targets.

"Admittedly, there is uncertainty [regarding] the pace and magnitude of Tesla's capacity ramp, so our delivery estimates may prove unrealistic in some years. But the general upward trajectory seems certain, and as one particularly astute retail investor noted on the Q1 call, Tesla's longer-term guidance (of 50% CAGR for deliveries) implies 4M deliveries in 2025; so Tesla must have a capacity plan that supports this level of production." - Alex Potter

The graph below shows annual vehicle deliveries if Tesla were to achieve a 50% CAGR from 2020 to 2030, implying 4.2M in 2025.

Screen Shot 2020-07-13 at 5.24.05 PM

Potter notes that while their delivery outlook has increased, improving margin outlook due to software is the biggest factor behind the price target increase.

"While deliveries are a key driver of our increased near-term estimates, software is the biggest driver of our increased DCF-based price target," - Alex Potter

Piper Sandler forecasts Tesla's revenue from the Full Self-Driving option to exceed $50B in 2030.

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Personal note: I'd like that thank Alex Potter for the shoutout on this one. The intent behind asking the compound annual growth rate question is being realized.

Disclosure: Rob Maurer is long TSLA stock and derivatives.