Macquarie Research has begun coverage of Tesla with an outperform rating, saying shares of the electric auto maker can pop more than 70 percent.

"We view Tesla as a disruptive technology growth company with differentiated products and strong brand presence in the secularly growing and equally disruptive markets of electric vehicles, energy storage, and energy generation," Macquarie analyst Maynard Um said in a note Monday evening.

"Tesla appears on track for production targets & should be able to achieve profitability" in the second half of this year," Um said.

Macquarie has price target of $430 a share on Tesla stock, which is 72 percent above Monday's closing price of $250.56 a share. The price target is also $10 a share higher than the level at which CEO Elon Musk said he would take Tesla private in a now infamous tweet.

Tesla's stock price rose 4.9 percent in Tuesday trading.

Um's thesis relies on Tesla having enough cash "to get over the debt maturity hump." He said Tesla will be able to push through the debt challenges through multiple sources of cash flow. Macquarie estimated Tesla will get $500 million to $600 million in revenue from clean energy government credits in the second half of 2018. He also said cash flow will be boosted by rising Model 3 sales and access to $1.2 billion in unused debt.

Musk has said Tesla does not have to raise more capital, but the analyst said it might be a good idea. "We believe a raise through equity would be beneficial in further strengthening its longer-term outlook as well as providing a cushion in case of any unexpected periods of economic softening."

Macquarie said investors should look at Tesla as a technology company rather than a traditional auto manufacturer. Um also acknowledged that Musk's unconventional CEO behavior might have investors "understandably concerned."

"Musk's actions and behaviour could adversely impact Tesla's multiple," the analyst wrote. But "Musk will continue to be a key part of Tesla in the foreseeable future."