Bank of America upgrades Tesla, the second bearish analyst in 24 hours to capitulate

Published Fri, Aug 14 20208:03 AM EDTUpdated Fri, Aug 14 20209:34 AM EDT

(This story is for CNBC PRO subscribers only.) Tesla got its second Street upgrade in less than 24 hours on Friday after Bank of America more than doubled its price target on the stock while lifting its rating to neutral, citing the company's "unfettered access to capital." The firm said that the company's total production of around 500,000 vehicles over the last 17 years is "uninspiring progress," but that "Musk's leadership, a compelling brand, and improved execution are driving an ever- increasing stock price." Based on this, Tesla has access to low-cost capital, which is a "key advantage" that could "accelerate growth to almost 50% per annum over the next five years." Bank of America's upgrade comes after Adam Jonas, Morgan Stanley's widely-followed auto analyst, upped his rating to equal-weight from underweight on Thursday evening . Tesla has traditionally been a polarizing name on the Street. The bears believe that the stock, which has shot up nearly 300% this year, isn't supported by the company's underlying fundamentals. It's also been known to experience violent swings in either direction. On Wednesday, for example, shares jumped 13.12% after the company announced a five-for-one stock split , despite the fact that stock splits are cosmetic, meaning nothing about a company's actual business changes. But Bank of Amercia's analysts, led by John Murphy, said that in this case, the elevated stock price means cheaper capital. "The higher the upward spiral of TSLA's stock goes, the cheaper capital becomes to fund growth, which is then rewarded by investors with a higher stock price," he noted. "The inverse of this dynamic is also true, and it is this self-fulfilling framework that appears to explain the extreme moves in TSLA stock to the upside and downside." Murphy's new target of $1,750, up from a prior forecast of $800, is about 8% above where the stock closed on Thursday. "While we remain skeptical that TSLA will be the dominant EV automaker in the long-run, if a big global footprint can be built with no-cost capital, the 'growth' story would carry the day for the stock," Murphy added. Shares of Tesla were about 2% higher during early trading on Friday. - CNBC's Michael Bloom contributed reporting.

Tesla Motors CEO Elon Musk speaks to the media next to its Model S.

Nora Tam | South China Morning Post | Getty Images

(This story is for CNBC PRO subscribers only.)

Tesla got its second Street upgrade in less than 24 hours on Friday after Bank of America more than doubled its price target on the stock while lifting its rating to neutral, citing the company's "unfettered access to capital."

The firm said that the company's total production of around 500,000 vehicles over the last 17 years is "uninspiring progress," but that "Musk's leadership, a compelling brand, and improved execution are driving an ever- increasing stock price." Based on this, Tesla has access to low-cost capital, which is a "key advantage" that could "accelerate growth to almost 50% per annum over the next five years."