Tesla Inc. (TSLA, Financial) shares were up over 3% just a few hours after the opening bell, supported by an upgrade by analysts at Piper Jaffray. Jaffray analysts upgraded the stock from "overweight" to "neutral" and raised its target price from $223 to $368.
The price hike equates to an over 20% upside from Friday's close, says CNBC.
Piper said Tesla has a "captivating impact on consumers and shareholders alike" and noted that the advantage would be "difficult to replicate."
"In the minds of its customers, employees and shareholders, Tesla isn't just another company," said Piper.
Still, the firm says investors should be prepared for "a bumpy road" in the near future. Investing in Tesla does have its risks, the analysts say.
"But even with all the risks, we think growth investors can't afford to ignore this stock," Piper said.
While the firm is bullish on Tesla, the firm lowered its full-year EPS estimates drastically for full-year 2017 from a 42 cents per-share profit to a loss of $4.83 per share.
Tesla is known for its unreasonably fast production timelines and its ability to burn through cash at a rate other companies "would be crucified for," said Piper.
But the company's superior products, innovation and mission have kept the stock relatively unscathed.
Now, the electric carmaker is making headlines for potentially solving a serious dilemma in the auto-driving vehicle industry: liability in an accident.
A class-action lawsuit filed in 2016 alleges that Tesla's decision not to engage its AEB (automatic emergency braking) system when a human is driving is the cause of preventable accidents, the liabliity attorneys argue.
According to the complaint, the AEB system will not engage "in situations where you are taking action to avoid a potential collision. For example: you turn the steering wheel; you press the accelerator; you press and release the brake pedal; a vehicle, motorcycle, bicycle, or pedestrian is no longer ahead."
Tesla responded by stating that the company has no legal duty to produce a failsafe car, and that it cannot design an algorithm that would prevent the vehicle from driving into fixed objects while being controlled by a human driver.
The outcome of the lawsuit will likely set a precedence as to who will be held liable in similar cases and whether the carmaker is to blame for not designing a system that intervenes while a human is in control of the vehicle. That precedence is sure to affect Tesla's stock.
Issues, like liability, may be the cause of that "bumpy road" Piper referred to. With innovation being the main focus of the company, Tesla will face a few hiccups along the way as it continues to do things other manufacturers have yet to do.
Tesla shares have been steadily climbing over the last month, rising from $243.69 on March 10 to $309.96 as of April 10.
With a market cap of $51 billion, Tesla has been valued at almost $1.7 billion more than General Motors (GM, Financial) in morning New York trade. The carmaker has also surpassed Ford's (F, Financial) market cap.
Disclosure: The author does not own any equity in any of the companies mentioned.
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