Tesla Inc. (TSLA) short sellers continue to take a hit following the carmaker's annual shareholder meeting in which Elon Musk was voted to stay on as chair and CEO and at which Musk announced that the firm is on track to produce 5,000 Model 3 sedans per week. (See also: Musk Promises 'Short Burn of the Century'.)

Tesla, the most shorted U.S. equity, with over 30% of its floating stock currently sold short, according to FactSet, could rally another more than 40% over the next 12 months, according to one team of bulls on the Street. (See also: 3 Things We Heard at the Tesla Annual Meeting.)

Carmaker to Gain as Model 3 Ramps Up

On Friday, Nomura Instinet analyst Romit Shah wrote a note to clients indicating that the Palo Alto, California-based electric car company should benefit from higher-than-expected average selling prices (ASP) for its first mass-market vehicle, driven by "stronger-than-expected demand for all-wheel-drive and performance configurations." Meanwhile, the company should see cost leverage increase as it scales to higher levels of production and ramps up efficiency. He expects costs for long-range batteries to decline by as much as 20%. Nomura Instinet is also upbeat on Tesla's move into China, with its first overseas factory set to open in Shanghai. 

Shah lifted his 12-month price target to $450 from $420, reflecting an upside of as much as 41% from Friday afternoon as shares trade up about 1% at $318.95. TSLA stock has rallied nearly 12% in the month of June and 2.6% year-to-date (YTD). The Nomura Instinet analyst isn't the only one turning more bullish on TSLA as it reverses its sell-off and jumps back to levels not seen since March.

"Tesla likes to consolidate and then thrust higher,” says TradingAnalysis.com’s Todd Gordon, forecasting an over 25% rally for shares the EV maker. Over the past three years, TSLA stock has faced major selling pressure twice, as analysts questioned fundamentals, noted Gordon. 

"As everyone was really coming down on Telsa on the fundamentals you can see that all we did was a 37 percent decline which was very much in line with the last decline, which was 34 percent. It's actually very symmetrical, very technical, and very expected," wrote Gordon. He expects the stock to retest September highs above $400.