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Tesla tumbles 5% post-earnings but some analysts are still betting on new highs

Tesla shares were recently down about 5 percent Thursday morning, after the company reported Wednesday evening mixed quarterly results and the planned departure of a senior executive.

Still, at least two analysts who follow the stock have raised their price targets.

RBC Capital analyst Joseph Spak, who has the equivalent of a "hold" rating on the stock, raised his target to $314 from $245, while Baird analyst Ben Kallo, who has the equivalent of a "buy" rating on the stock, lifted his target to $368 from $338.

Some of the major themes analysts are discussing are the Model 3 production ramp, whether Tesla will raise capital this year (as many expect it to), and what the company will do with the acquisition of SolarCity.

Both Spak and Kallo noted bears may be concerned over weak gross margin numbers for the automotive business in the fourth quarter, and over Tesla's forecast that it will deliver about the same number of Model S and X cars for the first half of 2017 as it did for the second half of 2016.

Spak expects automotive gross margin to climb back up to roughly 25 percent and beyond through the first and second quarters, before pulling back a bit as Model 3 production begins.

Tesla said in a letter to shareholders that automotive gross margins declined for three reasons. First, it was hurt by some delays in the deployment of premium updates to its autopilot software. Secondly it suffered from unfavorable foreign exchange rates, and third, it had an increase in the sale of fixed assets. Spak said the higher fixed asset sales resulted from Tesla's efforts to prepare for Model 3 production.

Kallo also said that Tesla indicated fourth-quarter net orders for the Model S and X rose 49 percent over the same quarter in 2015, which suggests the demand for the cars is strong.

Both Spak and Kallo cited Tesla's continued progress on the production ramp for the Model 3 as a positive for the stock.

Spak also noted that management is increasingly confident that the Model 3 can deliver profitability on par with the S and X models once it reaches Tesla's expected production rate of 5,000 cars a week. On Wedneday, Tesla said it should hit that pace during the fourth quarter.

Tesla Chairman and CEO Elon Musk said on a conference call Wednesday night that the company does not need to raise capital to complete the Model 3 production ramp, but that it may ask investors for more money anyway to reduce risks to the business.

Analysts still expect the company to raise somewhere between $1.5 billion and $2.5 billion at some point, though Spak wrote that could be the last time Tesla needs to raise money at all.

This was also the first quarter Tesla reported results following its merger with SolarCity, which has helped push Tesla from being an automaker to a broader sustainable energy company.

Kallo, a more bullish analyst with an "outperform" rating on the stock, blamed the quarterly loss in part on the acquisition of SolarCity, and said the solar piece of Tesla's business exceeded his expectations for the quarter.

Oppenheimer analyst Colin Rusch said in a note sent Wednesday that he expects Tesla's solar business to be an "increasingly small portion of the company's narrative." Rusch has no price target on the stock, and maintains the equivalent of a "hold" rating.

Rusch has repeatedly said in the past that he believes Tesla's SolarCity acquisition is a costly distraction for the company.

Both Spak and Kallo's new price targets are well above Tesla's all-time high of $291.42. Morgan Stanley analyst Adam Jonas maintained his price target of $305, in a note sent Thursday morning.