Last week Tesla's stock plummeted after a video of a Model S on fire went viral. Elon Musk took to his blog to explain the incident and defend the Model S.

Today, Jefferies analyst Elaine Kwei called the the fire a "freak accident" and wrote that "the Model S is still considered safer than conventional vehicles."

Kwei raised her price target to $210, from $160.

She also raised her third quarter Model S delivery estimate to 5,500 units, from 5,250 units "based on reported VIN numbers, deliveries in Europe, and higher rates of production."

"Last week we held test drives and meetings with Jeff Evanson, VP of IR," she wrote. "Based on our discussions with investors and opinions expressed by current/prospective owners, it appears the Model S is still considered safer than conventional vehicles, in contrast to media headlines questioning EV safety. The company’s track record of innovation and groundbreaking products gives us confidence in the execution of future vehicles."

Here are some of the details of her investment thesis:

"Technology and brand leader in advanced automobiles."

"Company is focused on producing high-quality, high-performance EVs"

"Model X and Gen III vehicles should boost sales."

"Unique retailing store strategy and in- house service network."

"10-year DCF [Discounted Cash Flow] assuming 25% revenue CAGR [Compound Annual Growth Rate] and EBIT of 17%-18%; Target Price: $210."

Tesla believes it will achieve 400,000 - 500,000 units of production capacity at its Freemont plant by 2020.