Share’s of Elon Musk’s Tesla (tsla) popped 2.5% in early trading Monday following an analyst upgrade to Buy from Argus Research saying the company is likely to lower the cost of its vehicles and do well in 2016.
“Although Tesla has faced production shortfalls and cost overruns over the past 18 months, we believe that the company has made progress in addressing these issues and that it is poised for much stronger performance in the coming quarters,” wrote analyst Bill Selesky in a report Friday, placing a price target of $333 on the company.
Argus also noted that the company’s now completed “Gigafactory” in Nevada, which management has said will reduce costs by 30%, is a notable upside, as it will allow Tesla’s third-generation vehicles to be priced around $35,000. Tesla cars currently start around $69,900 with the 2015 Model S.
That pushes up Argus’ expectations of the company’s revenue for 2016 up to $11.18 billion—a 31% increase from the firm’s previous estimate.
The report comes as the electric car’s company’s shares have been in a head dive since the start of the year, reaching as low as $141.05 in early February on production shortfalls. Famed short-seller Andrew Left of Citron Research also jumped in the fray around the same time, saying he was shorting Tesla and expected the stock to fall to $100 by year end.
Though investors felt far more bullish after Tesla’s fourth quarter earnings report mid-February, when the company told investors production is still on track despite delivering fewer than expected electric cars in 2015.
Meanwhile, buzz surrounding Tesla’s lower priced Model 3 launch coming later this month has pushed the stock toward a positive note.
Fellow investment research firm Bernstein recently upgraded their view of Tesla, saying the Model 3 launch could push other carmakers into the electric car space, as at $35,000, the vehicle is cheaper than some gasoline-based automobiles.
Argus however did lower Tesla’s 2016 earnings per share estimate to $1.25 from $1.48, as firm anticipates higher costs of investments, which likely includes labor and overhead.