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Jefferies and Deutsche increase Tesla price targets as analysts expect a strong 2020 performance

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Tesla CEO Elon Musk views the new Tesla Model Y at its unveiling in Hawthorne, California on March 14, 2019.
Frederic J. Brown | AFP | Getty Images

Analysts at Jefferies and Deutsche Bank increased price targets for Tesla on Tuesday, with both interpreting the electric automaker's recent production milestones as a strong sign for the year ahead.

Jefferies was the more bullish of the two, expecting shares of Elon Musk's company to continue its rally and climb another 14%. The firm stuck to its buy rating, with analyst Philippe Houchois writing that Tesla's "auto business should turn profitable this year."

"We think it would be wrong to exit Tesla on valuation given that: it is the only [automaker] engaged in a positive-sum game in [electric vehicles] amid rising market acceptance," Houchois said.

Deutsche Bank is not quite as optimistic, as even the firm's increased price target expects Tesla's stock to slip 13%. But Deutsche analyst Emmanuel Rosner left room to the upside when explaining his mixed outlook, which could change if Tesla's production and overall performance exceeds his expectation.

"Tesla truly seems to be firing on all cylinders currently ... but with the stock hovering around all-time highs, we worry investor sentiment has gotten bullish too fast, ignoring some of the nearer-term execution risks," Rosner said. "Ultimately, this year's profits and free cash flow will depend on how successful the company is in ramping up output at its new Shanghai facility, and how quickly Model Y can start production."

Tesla shares rose 2.5% in trading to close at $537.92.

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