Tesla jumps after Goldman Sachs upgrades the automaker's stock and boosts its price target by 40%

AP Photo/Ng Han Guan

• Tesla gained in pre-market trading Tuesday after Goldman Sachs upgraded the electric vehicle maker's stock to "buy" from "neutral" and raised its price target to $780.
• Strategists believe mainstream adoption of electric vehicles is accelerating, battery prices are falling fast, and government regulations will eventually phase out higher-emission vehicles.
• Tesla's other clean-energy products, including solar panels and roofs, make for promising opportunities.
• "The energy business should also benefit from the regulatory shift toward carbon reduction and clean energy, and solar market valuations have similarly accelerated," strategists wrote.
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Shares in Tesla jumped on Thursday after Goldman Sachs upgraded its stock to "buy" from "neutral" and boosted its price target to $780, currently the highest on Wall Street.

Tesla stock rose as much as 3% in pre-market trading. The electric vehicle maker's shares are up 592% year-to-date, boosted by its upcoming inclusion in the S&P 500 on December 21 and fading concerns about its ability to make profits.

Goldman's strategists wrote in a December 2 report that "the shift toward battery electric vehicle adoption is accelerating and will occur faster than our prior view."

They noted battery prices are falling faster than expected, while governments around the world are passing regulations that could entirely phase out higher-emission vehicles within 10 to 20 years. That, in turn, is improving the sales outlook for electric vehicles.

Other lesser-known product offerings, including solar roof installations for homes, will add to Tesla's long-term sales and potential, in Goldman's view.

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Goldman Sachs

"The energy business should also benefit from the regulatory shift toward carbon reduction and clean energy, and solar market valuations have similarly accelerated," strategists wrote. 

More bearish analysts have turned optimistic toward Tesla, believing its first-mover advantage in the EV space allows it to capitalize on a growing user base. Its stock currently has 11 sell ratings, 10 hold ratings, 11 buy ratings, and 1 strong buy rating from analysts, according to MarketBeat.

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