Baird analysts cited catalysts in the shape of the start of European car deliveries, production in China and inclusion in the S&P 500

The Model 3, which currently starts at around US$50,000 has been the best-selling car by revenue in the US over the past few months, with sales averaging almost $1B a month

Analysts at Baird reiterated their Outperform rating on Tesla Inc (NASDAQ:TSLA) Thursday and raised their price target by 13% to $465 from their previous target of $411.

“We think Tesla’s transition to becoming sustainably profitable will transform the narrative around the company and should coincide with positive catalysts (including new product introductions/production, international Model 3 deliveries, China factory, etc.) which should drive shares higher,” wrote Baird analysts Ben Kallo and David Katter.

“We think Tesla may be in the first positive estimate revision cycle in 3-4 years, and believe estimate revisions, upcoming catalysts, and improving sentiment driven by a shifting narrative could drive shares higher,” she added.

The analysts alluded to several catalysts in the shape of the start of “European deliveries, initial production in China, introduction/production of new products, and inclusion in the S&P 500.”

Tesla’s long-awaited mass-market Model 3 electric car is set to hit European roads in February next year.

Customers who put a deposit down way back in March 2016 will be among the first to take delivery of the cars as long as they confirm their order by January 1.

The first Model 3 rolled off the assembly line in the US last July and delivered to Tesla’s billionaire boss Elon Musk.

The Model 3, which currently starts at around US$50,000 (£39,000), has been the best-selling car by revenue in the US over the past few months, with sales averaging almost US$1bn a month.

As production ramps up and becomes more efficient, Musk wants to build a basic model that would retail at US$35,000.

The analysts at Baird said Tesla management does not believe it needs to return to capital markets, but "we think a capital raise would be positive."

“We think a capital raise would remove lingering liquidity concerns and could be prudent to strengthen the balance sheet and insulate against risks of a broader global slowdown,” wrote the analysts.

While touching on Tesla’s outlook the analysts said they believed the Tesla narrative is starting to change from “Tesla is on the verge of bankruptcy” to “Tesla can make money,” and they believed improving sentiment will drive share appreciation.

Contact Uttara Choudhury at uttara@proactiveinvestors.com

Follow her on Twitter: @UttaraProactive