Alexis Georgeson | Tesla. Goldman upgrades Tesla to "buy" from "neutral," seeing a 22 percent upside to its six-month price target of $250.

Shares of Tesla Motors (TSLA) gained more than 3 percent Wednesday after Goldman Sachs' bullish call on the electric car maker's stock.

Goldman upgraded Tesla to "buy" from "neutral," saying it sees a 22 percent upside to its six-month price target of $250.

"While we believe the volume targets are ambitious, Street and investor expectations seem more grounded and following a 23% decline in the share price post the Model 3 unveil, we do not believe Tesla shares are fully capturing the company's disruptive potential," the bank said in a note to clients Wednesday.

The headline on the note said Goldman is "putting in our reservation for the Model 3." After the Wednesday close, Tesla announced a $2 billion stock sale to help ramp its production of the Model 3.

Tesla's stock closed at $204.66 Tuesday and was trading around $210 in the premarket Wednesday.

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Goldman's valuation is based on five probability-weighted scenarios, "plus stationary storage optionality, all of which embed a 20% cost of capital."

TSLA valuation summary

Source: Goldman Sachs

Tesla shares have bounced back recently, gaining more than 26 percent over the past three months. The stock is still down approximately 12 percent year to date and by more than about 15 percent over the past year.

TSLA one-year chart

Source: FactSet

Disclosures: Goldman owns at least 1 percent of Tesla common stock and makes a market in the stock.

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