Tesla's biggest bull on Wall Street is running again

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Elon Musk

REUTERS/Beck Diefenbach

Yes we can.

About a year ago, Wall Street experienced the collective realization that Tesla is an actual car company, not a fast-growing technology stock, and analysts began pulling back on some of their more bullish calls.

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One of them was Adam Jonas, lead auto analyst for Morgan Stanley. At one point in 2015, Jonas and his team had a target price of $450 on Tesla shares.

That got cut big time, even as Tesla continued to build and deliver more cars.

Now, in research note published on Thursday, Jonas has upped his target price to $305 from $242 and placed and "overweight" or buy rating on the stock.

Tesla is in the midst of an out-of-character early-year rally, with the stock now trading at $238. In pre-market action on Thursday, shares were up a whopping 4%, to $248.

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Jonas cited four major factors in his upgrade: a successful 2017 launch of the $35,000 Model 3, with better volume production arriving in 2018; the emergence of electric vehicles as a "core trend" for big carmakers, with EVs reaching 23% of the market in 2030; the disappearance of high-tech competitors with plans to build actual cars; and a pro-US manufacturing policy set to arrive from the Trump administration.

Jonas is one of the more out-there thinkers on Wall Street when it comes to the future of transportation, and it shows in his analysis if Tesla. He really likes a potential move by Musk and his team into providing mobility services.

"We see Alphabet's formation of Waymo, whose mission is focused on making better drivers (rather than better cars), as reducing the immediate competition for human capital vs. Tesla," he wrote. "We value Tesla Mobility (which the company calls "Tesla Network") in our price target at $76 per share."

Mobility service margins could be quite a bit higher than what automakers see on the vehicle sales side - as high as 20%, according the Ford CEO Mark Fields, who is pushing his company in that direction.

Tesla doesn't have a lot of news catalysts on the horizon, and its fourth-quarter and full-year 2016 earnings, set to be announced in February, aren't guaranteed to repeat the unexpected profit of the third-quarter. What's driving positive sentiment at this point appears to be both political and a throwback to the "Tesla is a car company" realization.

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In short, Tesla has gotten better at building cars, having produced almost 85,000 in 2016. That means, critically for analysts such as Jonas, that the Model 3 is less fraught with risk than previously believed.