A Tesla analyst says he's one step closer 'believing that the story is real' and that the stock could shoot to $600

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Tesla CEO Elon Musk

• Wedbush analyst Dan Ives on Thursday raised his 12-month price target on Tesla by $100 a share to $370.
• Ives thinks the company will easily hit its target of shipping at least 360,000 vehicles this year.
• With Tesla's new factory in China ahead of schedule, he's optimistic the company's sales and stock will jump higher next year.
• But he remains cautious on the stock overall, given the company's numerous recent setbacks.
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Dan Ives isn't yet ready to return to being a bull on Tesla. But he's nearly there.

On Thursday, Ives, a financial analyst who covers the electric car market for Wedbush, boosted his 12-month price target on Tesla's stock by $100 a share to $370. Although he maintained his neutral rating on the stock, and his increased price target is still below the company's actual market price of about $430 a share, Ives said in a research note he could see a plausible scenario where Tesla stock jumps as high as $600 a share.

"We're one step closer to getting more bullish, to believing that the story is real," Ives told Business Insider.

Tesla's stock fell by nearly half in the first part of this year, hitting a low of less than $177 a share in early June. Since then, though, it's been on a tear, with its price more than doubling, boosted by a much-better-than-expected third-quarter report.

Ives thinks Tesla's financial turnaround is proceeding apace this quarter. Tesla has forecast that it will deliver 360,000 to 400,000 vehicles this year. Doing so would require it to deliver around 104,500 in the current quarter, which would be a record amount for the company and about 7,300 more than it delivered in the third quarter.

In October, Tesla said that it was "highly confident" it would exceed the lower end of its expected delivery range. And based on data out of Europe, Ives thinks agrees with that assessment. He estimates Tesla is on track to ship 112,000 to 115,000 vehicles in the holiday period.

"European demand is much stronger than expected," Ives said. He continued: "Many, including us, have been surprised by this [overall] demand the last few quarters."

China could help send Tesla's stock higher

The good news for the company and its backers will likely continue into next year, he said. Tesla has said that the build-out of its new factory in China is ahead of schedule. Once it's online, vehicle production in the country there should boost the company's sales and stock, Ives said.

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Tesla is building a massive factory in Shanghai to meet demand in China."If you look at European demand as well as what's happening in China, it feels like the turnaround's real," he said.

But he's not yet ready to upgrade the stock back to a buy. Much of the reason for that is Tesla's recent history, he said. Seemingly every time of late that investors have gotten bullish on the company, it's had a setback in demand or operations that's sent its stock spiraling.

Ives himself reduced his rating from outperform to neutral in April and cut his price target to as low as $220 in July as Tesla's shares floundered. And he's wary of another unforeseen stumble by the company.

"We need to make sure that the next quarter or two there's no more surprises," he said. "There's a snake bitten investor," he continued, "and I think we're in that camp."

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