Tesla, Inc. (TSLA​) soared nearly 5% on heavy volume after Berenberg upgraded the stock to a Buy with a $464.00 price target. The German analyst does not see any real mass-market electric vehicle competition from traditional manufacturers, noting that near-term results are "unimportant" as the company works toward "superior" long-term free cash flow. At scale, the analyst believes that cash flow per vehicle could reach 50% or more.

In addition to the favorable analyst upgrade, the company announced that the Model X became the first sports utility vehicle (SUV) to achieve a five-star crash rating in every category by the National Highway Traffic Safety Administration. The fortified battery pack at the bottom of the vehicle creates a low center of gravity that dramatically reduces the rollover probability compared with any other SUV that is currently on the market. (For more, see: What We Learned From Tesla's Shareholder Meeting.)

Chart showing the year-to-date performance of Tesla, Inc. (TSLA) stock

From a technical standpoint, the stock broke out from upper trendline resistance earlier this month and briefly touched R2 resistance at $377.02 before giving up some ground. Tuesday's rally brought the stock back to R2 resistance levels at which traders should watch for a breakout to new highs. While the moving average convergence divergence (MACD) remains bullish, the relative strength index (RSI) reading of 72.87 suggests overbought conditions.

Traders should watch for a breakout from R2 resistance to new highs or a potential period of consolidation between R1 and R2 levels before a move higher. While many analysts remain bullish on the stock, others remain highly skeptical that the company will be able to deliver on its Model 3 projections. Any failure – or hint of failure – in this ability could send shares lower as the market revalues the cash flow timeline. (See also: Tesla Stock Could Speed to $1,000 by 2020.)

Charts courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.

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